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Perta v. National Credit Care Corp.

United States District Court, N.D. Illinois, Eastern Division

September 30, 2019

REBECCA PERTA, individually and on behalf of the class members described below, Plaintiff,


          Robert M. Dow, Jr. United States District Judge

         Plaintiff Rebecca Perta sought help in repairing her credit from Defendant National Credit Care Corporation (“NCC”) and Defendant Credit-RX, Inc. (“Credit-RX”). She alleges, among other things, that those defendants misrepresented their services, charged her for services prematurely, and fraudulently sent documents to credit reporting agencies. Plaintiff filed a purported class action complaint [1], bringing four claims against NCC and Credit-RX under the Credit Repair Organization Act, 15 U.S.C. § 1679 et seq. (“CROA”), the Illinois Credit Services Organization Act, 815 ILCS 605 et seq. (“CSOA”), and the Illinois Consumer Fraud and Deceptive Business Practices Act 815 ILCS 505/2 et seq. (“ICFA”), and one claim against a surety bond issued by Fidelity & Deposit Company of Maryland (“FDCM”). NCC and FDCM moved to dismiss [25], arguing that (1) Plaintiff lacks Article III and statutory standing because she failed to allege a concrete injury; (2) the complaint fails to meet the heightened pleading requirements of Rule 9(b); and (3) the complaint fails to state a claim under the CROA and CSOA.

         For the reasons explained below, the motion to dismiss [25] is granted and the complaint [1] is dismissed for lack of subject matter jurisdiction because it fails to allege a concrete injury as required for Article III standing. The dismissal is without prejudice and with leave to file an amended complaint by October 28, 2019. This case is set for further status hearing on November 5, 2019 at 9:00 a.m.

         I. Background[1]

         Defendants NCC and Credit-RX offer credit repair services to consumers. Defendant Fidelity and Deposit Company of Maryland (“FDCM”) issued a $100, 000 surety bond[2] to Defendant NCC, Bond No. LPM7619362, underwritten by Zurich American Insurance Company. Plaintiff Rebecca Perta sought help from NCC and Credit-RX in addressing problems with her credit reports and improving her credit. Claiming that Defendants mispresented their services, billed her prematurely, and sent false documents to credit reporting agencies, Plaintiff filed the complaint [1] now before the Court.

         Venue is proper in this district pursuant to 28 U.S.C. § 1391, because Defendants’ actions and conduct affected Plaintiff within this district and Defendants conduct business within this district. The Court’s subject matter jurisdiction is the subject of the motion before the Court. Defendant argues, among other things, that Plaintiff lacks standing because she has failed to plead an injury-in-fact. The Court discusses its findings on this issue below.

         Plaintiff, a victim of auto loan fraud, [3] wanted to dispute certain items on her credit report and improve her credit score. A friend referred her to Johanna Diaz, an employee of Credit-RX, for help improving her credit history. On December 30, 2016, Plaintiff called Diaz, who said that Credit-RX and NCC would be able to improve her credit score by sending letters to the three main Credit Reporting Agencies (“CRAs”) on her behalf. Diaz said Plaintiff would need to make a down payment of $189 to sign up.

         Diaz then sent Plaintiff an email [1-3] identifying NCC as Credit-RX’s “processing department” and stating that NCC would send Plaintiff an email regarding payment authorization. [1-3] at 3. Diaz’s email also provided instructions for Plaintiff regarding an investigation into her credit history, making future payments on debts, and updating her payment information with Credit-RX. Id. at 3-4. Diaz’s email said that Plaintiff’s credit report was attached, but the exhibit Plaintiff provided does not include any attachments.[4] Id. at 4.

         Later on December 30, 2016, NCC sent Plaintiff an email asking her to sign the attached Client Services Agreement (“CSA”), which she signed electronically. The CSA describes two types of services: (1) Credit Report Consulting/Analysis, including “comprehensive analysis of your credit report; counseling regarding credit score algorithms; consumer credit education; consumer rights regarding credit reports and disputes; and a complete listing of the negative items appearing on your credit report”; and (2) Monthly Services, to correct errors or discrepancies on a credit report, described as “(i) reminders about materials or information that you need to provide to NCC (ii) access to NCC credit consultants, (iii) work to clear and-or correct your credit report of the credit and personal items which you believe to be inaccurate, misleading or unverifiable, (iv) consult directly with you as to any individual efforts needed to help correct your credit report, (v) review and analyze the correspondence from credit bureaus, creditors and others, including any credit report that is forwarded by you to NCC or received by NCC directly from such sources.” [1-4] at 8. The fee for the Credit Report Consulting/Analysis was $189, “due and payable within five (5) days from the date of consultation once all services have been performed as listed above in Section 3a.” Id. The Monthly Services cost $69 per month, billed in arrears. Id.

         Apparently on the same day (the complaint is not entirely clear on the timing), Plaintiff received a phone call from NCC, during which she authorized NCC to charge her $189. The NCC caller described this as a “down payment, ” which Plaintiff paid. Plaintiff alleges that NCC and Credit-RX did not perform the services listed in 3(a) of the CSA, or perform any substantive consultation, prior to charging Plaintiff the $189 “down payment” and accepting that payment.

         Plaintiff began paying the $69 monthly fee (though the complaint does not state how many times she paid it). According to Plaintiff, NCC and Credit-RX sent letters to the CRAs falsely disputing certain accounts. The complaint says NCC and Credit-RX disputed these accounts “regardless of whether Plaintiff indicated they were inaccurate, ” but does not state whether Plaintiff told Defendants that those accounts were or were not accurate, or whether Plaintiff said anything at all to Defendants about those accounts. [1] at 6. The complaint asserts that NCC and Credit-RX forged Plaintiff’s signature on letters sent to the CRAs, attempting to deceive the CRAs into believing that Plaintiff sent the letters, because CRAs are not required to respond to or act on letters not sent “directly” from the consumer. The complaint also alleges, without describing specific statements, “On several occasions, Defendants misrepresented the efficacy of their services, claiming that Plaintiff’s credit history and report would be substantially improved- despite knowing that such an outcome was impossible given Plaintiff’s credit history and background.” [1] at 6.

         Finally, the complaint lists a variety of things that NCC and Credit-RX did not tell Plaintiff, but which Plaintiff seems to claim are true (see [1] at 6-7), including:

• no attorney reviewed Plaintiff’s credit report or advised her that it would be unlikely that her report could be changed to delete accurate adverse entries
• a generic dispute of “inaccurate” is ineffectual, that is, it does not provide enough information for a credit bureau or furnisher of credit information to investigate anything other than ...

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