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McCANE v. AMERICA'S CREDIT JEWELERS

December 1, 2005.

KENNETH D. McCANE, Plaintiff,
v.
AMERICA'S CREDIT JEWELERS, INC., d/b/a THE DIAMOND CENTER, Defendant.



The opinion of the court was delivered by: SUZANNE CONLON, District Judge

MEMORANDUM OPINION AND ORDER

Kenneth D. McCane brings a putative class action against America's Credit Jewelers, Inc. ("ACJ"), doing business as The Diamond Center, alleging violations of the Fair Credit Reporting Act ("the FCRA"), 15 U.S.C. § 1681, et seq. Pursuant to Federal Rule of Civil Procedure 12(b)(6), ACJ moves to dismiss the complaint. For the reasons set forth below, the motion is granted in part.

BACKGROUND

  The following facts are drawn from the complaint. McCane is a consumer residing in Illinois. He never initiated any credit transactions with ACJ, a Delaware corporation with an office in Illinois. Nor did he authorize ACJ to access his credit report. But ACJ sent him a letter, offering a gold club card. Compl. Ex. A. According to the letter, ACJ pre-approved him for a $5,000 line of credit. To receive the card, he would need to show a valid identification and proof of income. The letter further stated:
This offer is available to new customers who do not currently have an open credit line with The Diamond Center. You were selected to receive this offer because your consumer report from Equifax met our initial criteria. Final acceptance is subject to ability to meet our full eligibility requirements. Annual percentage rate not to exceed 19.8%. If you wish to opt-out of future offers, please write Equifax Options, PO Box 740123, Atlanta, GA 30374-0123 or call 888-567-8688.
The letter provided no additional information about the card.

  Based on this letter, McCane filed the present putative class action. His complaint alleges ACJ's letter violates two FCRA provisions: (1) 15 U.S.C. § 1681b(c)(1)(B)(i) by failing to make a firm offer of credit; and (2) 15 U.S.C. § 1681m(d) by failing to provide clear and conspicuous disclosures of consumers' rights to prevent further unsolicited use of their credit reports.

  ACJ moves to dismiss solely on the ground that § 1681m provides no private right of action. McCane's § 1681b claims are unaffected by this motion.

  DISCUSSION

  I. Motion to Dismiss Standard

  In ruling on a motion to dismiss, the court must accept well-pleaded allegations as true and draw all reasonable inferences in favor of the nonmoving party. Cler v. Ill. Educ. Ass'n, 423 F.3d 726, 729 (7th Cir. 2005). "A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, and dismissal of an action under the rule is warranted only if `no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Id. (quoting DeWalt v. Carter, 224 F.3d 607, 612 (7th Cir. 2000)). But a claim by an individual to enforce a federal statute must be dismissed if the underlying statute authorizes no private right of action. See Slovinec v. DePaul Univ., 332 F.3d 1068, 1069 (7th Cir. 2003) (per curiam). II. McCane's § 1681m Claims and ACJ's Motion

  The FCRA aims to protect consumers' right to privacy. 15 U.S.C. § 1681(a)(4). Unless consumers initiate a transaction, their credit reports may be accessed only in limited situations set forth in § 1681b(c). One such situation is when a creditor extends a "firm offer of credit" to a consumer. 15 U.S.C. § 1681b(c)(1)(B)(i). In addition to satisfying the firm-offer requirement, a creditor must make "a clear and conspicuous statement" with the following details:
(A) information contained in the consumer's consumer report was used in connection with the transaction;
(B) the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness [sic] or insurability under which the consumer was selected for the offer;
(C) if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer or any applicable criteria bearing on credit worthiness [sic] or insurability or does not furnish any required collateral;
(D) the consumer has a right to prohibit information contained in the consumer's file with any consumer reporting agency from being used in connection with any credit or insurance transaction that is not initiated by the consumer; and
(E) the consumer may exercise the right referred to in subparagraph (D) by notifying a notification system established under section 1681b(e) of this title.
15 U.S.C. § 1681m(d)(1). Under sections 1681n and 1681o, consumers may file civil actions for violations of certain FCRA provisions. McCane alleges ACJ violated both § 1681b and § 1681m.

  ACJ argues that a private right of action to enforce § 1681m was repealed by the Fair and Accurate Credit Transactions Act of 2003 ("the FACTA"), Pub.L. No. 108-159, 117 Stat. 1952 (2003). Section 311(a) of the FACTA added subsection (h) to § 1681m. See Pub.L. No. 108-159, § 311(a), 117 Stat. 1952, 1988-89. Paragraph (8) of the amended § 1681m(h) reads: ENFORCEMENT

  (A) No civil actions

 
Sections 1681n and 1681o of this title shall not apply to any failure by any person to comply with this section.
(B) Administrative enforcement
This section shall be enforced exclusively under section 1681s of this title by the Federal agencies and officials identified in that section.
15 U.S.C. § 1681m(h)(8) (emphasis added). Interpreting the term "section" in its plain meaning, ACJ concludes § 1681 m(h)(8)(A) eliminates the private right of action under the entire ...

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