United States District Court, N.D. Illinois, Eastern Division
June 17, 2005.
NANCY R. MURRAY, Plaintiff,
FLEXPOINT FUNDING CORPORATION, Defendant.
The opinion of the court was delivered by: ELAINE E. BUCKLO, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Nancy R. Murray, on behalf of herself and a proposed
class of individuals similarly situated, alleges that defendant
Flexpoint Funding Corporation ("Flexpoint") has willfully
violated her rights under the Fair Credit Reporting Act,
15 U.S.C. § 1681 et seq. ("FCRA"). Ms. Murray alleges that
Flexpoint, without her permission, accessed her consumer report
to determine, for its own purposes, her creditworthiness.
Sometime after February 15, 2004, Flexpoint sent Ms. Murray a
flyer announcing low mortgage rates (even for individuals with
"less than perfect credit") and offering a free "benefits
analysis." The flyer also stated that the recipient was "already
pre-qualified . . . for a new home loan" with Flexpoint. The
flyer urges the recipient to either call Flexpoint's toll-free
number or visit its website.
Ms. Murray alleges that Flexpoint's conduct in accessing her
consumer report violates FCRA as the flyer does not constitute a "firm offer of credit." Ms. Murray also alleges that the flyer
violates FCRA as it does not include certain required disclosures
in a "clear and conspicuous" manner. 15 U.S.C. § 1681m(d). Ms.
Murray alleges that these violations were committed in a willful
manner. 15 U.S.C. § 1681n. Flexpoint moves to dismiss the
complaint for failure to state a claim, pursuant to Fed.R. Civ.
P. 12(b)(6). I deny that motion, for the reasons stated below.
On a motion to dismiss, I accept all well-pleaded allegations
in the complaint as true, Turner/Ozanne v. Hyman/Power,
111 F.3d 1312, 1319 (7th Cir. 1997), and draw all reasonable
inferences in favor of the plaintiff. Strasburger v. Bd. of
Educ., 143 F.3d 351, 359 (7th Cir. 1998). I grant the motion
only if the plaintiff can prove no set of facts to support the
allegations in her claim. Id.
Flexpoint argues that the complaint must be dismissed because
the standards relied on by Ms. Murray to state her claim were not
established until the decision in Cole v. U.S. Capital, Inc.,
389 F.3d 719 (7th Cir. 2004). Flexpoint argues that it cannot
have willfully violated standards not in existence when the flyer
was sent, and that under prior precedent, the flyer would not
have violated FCRA standards. In order for Flexpoint's access of
consumer reports to be lawful, the flyer must meet both criteria:
it must be a "firm offer" and it must contain the required
disclosures in a "clear and conspicuous" manner. Ms. Murray
argues that Flexpoint fails on both criteria. A "firm offer" of credit constitutes a permissible reason for
an entity to access a individual's consumer report without her
knowledge or consent. 15 U.S.C. § 1681b. A "firm offer" is
defined within FCRA as "any offer of credit . . . to a consumer
that will be honored" if the individual meets specific criteria
based on the information in her consumer report.
15 U.S.C. § 1681a(1). The offer may also be conditioned on other specified
grounds. Id. Prior to the decision in Cole, a "firm offer"
was generally interpreted as any offer of credit to a consumer
that the offeror intended to honor. See, e.g. Tucker v. Olympia
Dodge, No. 03 C 976, 2003 WL 21230604, at *2 (N.D. Ill. Jun. 2,
2003) (Kennelly, J.) ("Tucker I"); Tucker v. New Rogers Pontiac,
Inc., No. 03 C 862, 2003 WL 22078297, at *3 (N.D. Ill. Sept. 10,
2003) (Pallmeyer, J.) ("Tucker II").
A factual question remains as to which standard applies to the
flyer at question here. Cole was decided on November 19, 2004.
The only dates provided in the complaint state that the flyer was
received by Ms. Murray sometime after February 15, 2004, and that
the "offer" in the flyer would expire on December 11, 2004. While
it is likely that the flyer was indeed sent prior to the decision
in Cole, I cannot state that it was as a matter of law.
Furthermore, even if the pre-Cole standard applies, I cannot
say as a matter of law that the flyer met that standard. It is
not clear from the face of the flyer what, exactly, the offer is.
In Tucker I, the offer was for an auto loan with a minimum amount
of $1,000. In Tucker II, the offer was for an auto loan in the
minimum amount of $24,995. Here, there does not appear to be even
an offer that specific. The flyer states that the recipient has
been preapproved for a home loan, but does not state in what
amount or at what interest rate. While a rate of 5.75 percent is
mentioned elsewhere in the flyer, that rate is hedged with
language such as "subject to change without notice" and "other
rates and terms available." An offer may be vague and meet the
pre-Cole standard, but there must clearly be an offer.
Questions also remain as to Flexpoint's state of mind when it
designed and sent the flyer, regardless of which standard was in
force. Such questions are generally more appropriate for a jury's
determination, not for disposition on a motion to dismiss. See
Lac du Flambeau Band of Lake Superior Chippewa Indians v. Stop
Treaty Abuse-Wisconsin, Inc., 991 F.2d 1249, 1258 (7th Cir.
1993) (such questions difficult to resolve on summary judgment).
Ms. Murray also alleges that the disclaimers required by FCRA
do not appear on the flyer in a "clear and conspicuous" manner.
15 U.S.C. § 1681m(d). The required disclaimers are listed on the
flyer. However, they appear on the back of the flyer, separate
from any language constituting the "offer." The disclaimers are
in a very small font, much smaller than any font used on the
front of the flyer. Finally, the only reference on the front of
the flyer to the disclaimers is a short sentence at the bottom, in a
smaller type: "See reverse side for important information." That
sentence follows others, in the same small type, which refer to
potential increases and changes in the rates and terms of the
proposed loan. Flexpoint acknowledges that before the decision in
Cole, courts generally looked to the interpretation of "clear
and conspicuous" in the Truth in Lending Act,
15 U.S.C. § 1632(a), as little analysis under FCRA existed. See, e.g.,
Tucker II, 2003 WL 22078297 at *4. Under that standard,
disclosures must be evaluated "from the standpoint of an ordinary
consumer, not the perspective of a Federal Reserve Board member,
federal judge, or English professor." Id.
Allegations that disclosures are not "clear and conspicuous"
state a claim under FCRA. Lifanda v. Elmhurst Dodge, Inc.,
237 F.3d 803, 805 (7th Cir. 2001). The font size of the
disclosures alone raises issues as to whether the disclosures
were "conspicuous." See id. ("`conspicuous' . . . cannot be met
as a matter of law by type disproportionately small to that in
the rest of the document.") See also Sampson v. Western Sierra
Acceptance Corp., No. 03 C 1396, 2003 WL 21785612, at *4 (N.D.
Ill. Aug. 1, 2003) (Zagel, J.). The disclosures are also on the
back of the flyer, and there is no clear reference to them on the
front of the flyer. Sampson, 2003 WL 21785612, at *4; cf.
Tucker II, 2003 WL 22078297, at *4 (noting that even though
disclosures were on the front side of the document, disclosures were still not
"conspicuous" as a matter of law). At this stage in the
proceedings, I cannot say that Flexpoint's disclosures were
"clear and conspicuous." The motion to dismiss is denied.
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