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August 1, 2003


The opinion of the court was delivered by: James Zagel, District Judge


Plaintiffs Oneta Sampson ("Sampson") and Lisa Stroud ("Stroud") (collectively "Plaintiffs") bring this action against Western Sierra Acceptance Corp. ("Western Sierra"), Ridge Chrysler/Plymouth, LLC ("Ridge Chrysler"), and City Chevrolet, Inc. ("City Chevrolet") (collectively "Defendants") for allegedly accessing plaintiffs' credit reports in violation of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq and for failing to make certain disclosures "clear and conspicuous" as required by 15 U.S.C. § 1681m(d). Ridge Chrysler has moved to dismiss the complaint pursuant to Fed.R.Civ.Pro. 12(b)(6) for failing to state a claim upon which relief may be granted. Western Sierra joins the motion to dismiss.


The facts alleged in the complaint are as follows. Ridge Chrysler mailed Sampson and City Chevrolet mailed Stroud certificates pursuant to Western Sierra's Mailer Program.*fn1 The [ Page 2]

certificates state that the plaintiffs are pre-approved for an auto loan based on their credit information. The loan may only be used for the purchase of a new or pre-owned vehicle at Ridge Chrysler (Sampson's certificate) and City Chevrolet (Stroud's certificate). Plaintiffs allege that they did not authorize anyone to access their credit reports and that the certificates sent by defendants do not constitute a permissible purpose for defendants to access plaintiffs' credit reports, thus defendants violated the FCRA, 15 U.S.C. § 1681b, 1681n. Plaintiffs further allege that the required disclosures under 15 U.S.C. § 1682m(d), located on the back of the certificate in virtually illegible small type, are not "clear and conspicuous" as required by the FCRA. [ Page 3]

Legal Standard

The purpose of a motion to dismiss under Rule 12(b)(6) is to "test the sufficiency of the complaint, not to decide the merits" of the case. Triad Associates, Inc. v. Chicago Housing Authority, 892 F.2d 583, 586 (7th Cir. 1989). In reviewing a motion to dismiss, the court must construe all allegations in the complaint in the light most favorable to the plaintiff and accept all well-pleaded facts and allegations as true. Bontkowski v. First National Bank of Cicero, 998 F.2d 459, 461 (7th Cir. 1993). A complaint should only be dismissed when "it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). "A complaint that complies with the federal rules of civil procedure cannot be dismissed on the ground that it is conclusory or fails to allege facts." See Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002).

FCRA and "Firm Offer of Credit"

The FCRA requires consumer reporting agencies to adopt reasonable procedures to avoid violations of the FCRA. 15 U.S.C. § 1681(b). The FCRA "applies to the actions of consumer reporting agencies and entities requesting credit information." Swift v. First USA Bank, 1999 WL 965449, at *2 (N.D. Ill. Sept. 30, 1999). Individuals negligently failing to follow the FCRA are potentially liable for actual damages and individuals willfully or knowingly failing to comply may be liable for punitive damages. Id; 15 U.S.C. § 1681n. The FCRA prohibits another party from obtaining a consumer's credit report unless the purpose is authorized by the statute. 15 U.S.C. § 1681b(f). One permissible purpose that does not require the consumer's consent or knowledge is if "the transaction consists of a firm offer of credit or insurance." 15 U.S.C. § 1681b(c)(1)(B)(i). A "firm offer of credit" is defined as "any offer of credit . . . to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer. . . ." 15 U.S.C. § 1681a(1). The offer may be further conditioned on the consumer meeting additional requirements specified by the FCRA. Id.

Plaintiffs allege that the certificate is not a firm offer of credit because the offer is so vague and lacking in terms that the offer is not capable of acceptance. The certificate fails to [ Page 4]

specify the amount of credit or any other terms of the credit, such as the interest rate. Ridge Chrysler argues that the language on the certificate is a firm offer of credit and there is nothing to indicate that the offer will not be honored.

Plaintiffs cite numerous cases defining "offer" in terms of Illinois contract law. Plaintiffs claim that an offer of credit under Illinois law must specify (1) the amount of credit, (2) the rate or amount of interest and (3) the size of the monthly payments or length of time within which it must be repaid. Commonwealth Eastern Mortgage Co. v. Williams, 516 N.E.2d 515, 519-20 (Ill.App. Ct. 1987). However, a firm offer of credit under the FCRA is "defined in terms of a creditor's intention to honor an offer of credit in accordance with the creditor's own undisclosed, predetermined criteria." Tucker v. Olympia Dodge of Countryside, Inc., 2003 WL 21230604, at *3 (N.D. Ill. May 28, 2003). Furthermore, the FCRA requires uniform application, thus "state-law definitions are not taken into account in construing the terms of a federal statute." Cole v. U.S. Capitol, Inc., 2003 WL 21003696, at *4 (N.D. Ill. May 1, 2003) ("Congress intended the FCRA to have uniform nationwide application. . . . State-law definitions of what constitutes an `offer of credit' under § 1681b would undermine uniformity of the application of the FCRA. . . . Therefore, definitions of what constitutes an `offer of credit' under Illinois law are irrelevant to the determination of whether the flyer constituted an `offer of credit' under § 1681.") (citing Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 43 (1989) (Stating that there is a presumption that federal statutes are not dependant on state law and that federal statutes are generally intended to have uniform application)).

Two other courts in this district that have recently ruled in similar cases (after Ridge Chrysler's reply to its motion was filed) on the issue of what a "firm offer of credit" is under the FCRA. Both cases, however, dealt with offers which guaranteed at least a minimum amount of credit. Tucker, 2003 WL 21230604, at *3 (holding that the mailing offering a minimum $1,000 credit toward an automobile purchase was a firm offer of credit); Cole, 2003 WL 21003696, at *5 (holding that the guaranteed $300 or more credit line to purchase a vehicle demonstrated that the offer would be honored as required by the FCRA). Defendants' certificate contains no minimum amount of credit and only states the holder is "pre-approved for an auto loan" and must [ Page 5]

call to find out the amount. Theoretically, this pre-approval could be for any amount, perhaps even as low as $1. Nonetheless, the FCRA "does not require a `firm offer' to be in any particular amount," see Tucker, 2003 WL 21230604, at *3, and the statute merely states that a firm offer of credit is "any offer . . . that will be honored. . . ." 15 U.S.C. ยง 1681a(1). Plaintiffs do not ...

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