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Dreher Tomkies LLP
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ILLINOIS COURT FINDS PRESCREENED SOLICITATION DID NOT CONSTITUTE FIRM OFFER OF CREDIT

The U.S. District Court for the Northern District of Illinois issued an order granting summary judgment for a plaintiff who claimed that the defendant creditor obtained her credit report for an impermissible purpose in violation of the federal Fair Credit Reporting Act (“FCRA”) in Kudlicki v. Farragut Financial Corp., No. 05 CV 2459 (N.D. lll. Jan. 20, 2006).

The defendant sent the plaintiff a prescreened solicitation to refinance her vehicle at an interest rate “as low as 5.5% APR.” The solicitation provided no other details regarding credit terms but contained a statement that “[r]ates and terms [are] subject to change at any time.” The court concluded that this statement precluded the offer from being a “firm offer of credit” as required by the FCRA if a consumer’s credit report is obtained in connection with a transaction not initiated by the consumer. See 15 U.S.C. § 1681b(c)(1). In reaching this conclusion, the court looked only to the four corners of the solicitation and rejected the defendant’s argument that circumstances outside the contents of the solicitation are relevant to a determination of whether a firm offer of credit is extended. The court cited to Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006), a case decided just three days before the Kudlicki order was issued, for the “four corners” rule.

The Kudlicki court also held that the defendant’s conduct was “willful” for purposes of 15 U.S.C. § 1681n (civil liability for willful noncompliance), despite the fact that the solicitation had been reviewed by an in-house compliance officer, a consumer reporting agency and California state regulators. Judge Lindberg found it to be “clear from the most cursory glance at defendant’s mailer that no firm offer of credit is being extended, and no compliance examiner could conclude otherwise.”

Mike Tomkies