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Nasca v. J.P. Morgan Chase Bank

March 5, 2007

KAREN L. NASCA, PLAINTIFF,
v.
J.P. MORGAN CHASE BANK, N.A. AND J.P. MORGAN CHASE & CO. DEFENDANTS.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge.

OPINION & ORDER

The Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., ("FCRA") establishes a statutory scheme designed to preserve the privacy consumers have in the information about them located in the files of a consumer reporting agency. Those agencies assemble and evaluate consumer credit information for the purpose of furnishing reports bearing on a consumer's credit-worthiness to potential lenders, such as defendants in this action. The FCRA permits the consumer reporting agency to release that credit information to potential lenders only for a specifically enumerated "permissible purpose." One "permissible purpose" is if the transaction consists of a "firm offer of credit" by the potential lender. In authorizing consumer agencies to release information for the purpose of having potential lenders make a "firm offer of credit" to the consumer, Congress "balanced any privacy concerns created by pre-screening with the benefit of a firm offer of credit or insurance for all consumers identified through the screening process." See Cole v. U.S. Capital, Inc., 389 F.3d 719, 725 (7th Cir. 2004) (citingS. Rep. No. 103-209, 13 (1993)).

Here, Karen L. Nasca received a solicitation in the mail from defendants J.P. Morgan Chase Bank, N.A. and J.P. Morgan Chase & Co. (collectively "Chase") stating that she was "pre- qualified for a new home mortgage or for a refinance of [her] existing mortgage with loan amounts up to $417,000 or more." Prior to mailing that solicitation, defendants had prescreened Nasca's consumer report. Nasca claims that the solicitation does not constitute a "firm offer of credit" and therefore her consumer report was not used by defendants for a statutory "permissible purpose."

Nasca seeks both damages and an injunction against further solicitations of this nature. Defendants have now moved to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim, contending that the Chase solicitation comports with all requirements of the FCRA. As set forth below, because the solicitation extended a "firm offer of credit" as defined by the FCRA, defendants have not violated the "permissible purpose" requirement of that statute. Accordingly, defendants' motion to dismiss the complaint is granted.

I. BACKGROUND

The facts are as set forth in the complaint.

In 2006, Nasca received a solicitation for real-estate secured credit from Chase though the U.S. mail. (Compl. ¶ 7.) It stated that Chase had reviewed Nasca's consumer report in order to determine whether or not to send her the solicitation. (Id. ¶ 10.) Nasca had not authorized Chase to go to the consumer reporting agency and obtain or use her consumer report. (Id. ¶ 19.)

One side of the Chase solicitation is in the form of a letter addressed to Nasca offering a "new home mortgage," "a refinance of your existing mortgage," or "a home equity loan or line of credit." (See the solicitation, which is annexed to the complaint at Ex. A.) That letter states that Nasca is "pre-qualified" for a loan "up to $417,000 or More." The letter does not specifically state any interest rates corresponding to any specific loan amount, but instead notes that Chase offers "fixed and adjustable rate mortgages with competitive interest rates." (Id.)

The letter also directs Nasca to "See reverse side for Important Program Information." (Id.) That reverse side states:

This prescreened offer of credit is based on information in your credit report indicating that you meet certain criteria. This offer is not guaranteed if you do not meet our criteria including providing acceptable property as collateral. . . . . .

Our mortgage consultants will help you determine the type of loan that best suits your needs, and the maximum loan you are eligible for, and confirm your pre-qualified status. Afterward, you must complete an application, comply with all of our loan program requirements and pay all applicable loan fees. (Id.) The Chase solicitation also informs Nasca that "[t]he final amount of your loan will be based on information obtained and verified as your application is being processed, including, but not limited to . . . verification of income and equity in your home." (Id.)

Some time after receiving Chase's solicitation in the mail, Nasca brought this action.*fn1

There is no allegation that Nasca ever responded to the solicitation or that she was rejected by defendants for a mortgage, a home equity loan, or any other form of credit. As noted, defendants now move ...


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