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Schwartz v. Goal Financial LLC

March 15, 2007


The opinion of the court was delivered by: Dora L. Irizarry, U.S. District Judge


On March 31, 2006, plaintiff Mordechai Schwartz brought suit against defendant Goal Financial LLC ("Goal Financial") alleging that defendant had violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., by accessing plaintiff's consumer credit report for a purportedly impermissible purpose. On May 19, 2006, defendant filed a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons set forth below, the defendant's motion to dismiss is granted, and the complaint is dismissed without costs to either party.


Plaintiff received a mail solicitation (the "solicitation") from Goal Financial regarding an offer of credit to consolidate plaintiff's student loans. (Compl. ¶ 6.) The solicitation, which plaintiff attached to his complaint, contains a "NOTICE OF CONGRESSIONAL ACTION. Failure to respond could result in limitations to your rights pursuant to Congressional bill S. 1932 and may expose you to Federal rate increases effective 07/01/06." (Compl. Ex. A.) The solicitation also explains that plaintiff's:

Federal Student Loan(s) may be subject to a) Federal rate increase(s) effective July 1, 2006 and b) the terms of Congressional bill S. 1932 which limit your right to certain borrower benefits. This could result in significantly higher monthly interest and total monthly payments. UNDER CURRENT LAW you may be eligible to reduce your current monthly payment and avoid all future rate increases. IMMEDIATE ACTION is recommended. Contact our office by April 28, 2006 at the number below for further information and/or to confirm eligibility for payment reduction. (Id.) At the bottom of the page, the solicitation provides, "If you do not wish to receive future offers, please call 1-888-5-OPT-OUT. See PRESCREEN & OPT-OUT NOTICE on reverse for additional information." (Id.) On the reverse side, the solicitation informs plaintiff, in smaller type, that:

You were selected for this opportunity to reduce your monthly student loan payments because your consumer report met initial criteria. As long as you are in your loan grace period or have entered repayment on each loan chosen for consolidation, you are not currently in default on a Federal student loan, and you are consolidating eligible Federal education loans totaling at least $15,000, you will meet eligibility requirements. If at the time of the offer you no longer meet the initial criteria, this offer may be revoked. (Id.) Plaintiff alleges that defendant pre-screened his consumer credit report to select him (and others) for the solicitation even though plaintiff had neither authorized it to do so, nor did defendant have reason to believe it had the authority to do so. (Compl. ¶¶ 9-11, 15-16.)

Based on these allegations, plaintiff claims that Goal Financial used a consumer report relating to him without a "permissible purpose" in violation of Section 1681b of the FCRA. (Id. at ¶¶ 20-22.) According to plaintiff, the solicitation does not constitute a "firm offer of credit" because it lacks definite terms and does not contain "value." Plaintiff further appears to argue that, if the court were to find the solicitation does constitute a firm offer of credit, the solicitation nonetheless violates the FCRA for failing to make required disclosures in a clear and conspicuous manner. (Pl.'s Mem. Opp'n Mot. Dismiss at 6.) Plaintiff makes no allegation that he ever responded to the solicitation or otherwise actually sought credit from Goal Financial.


I. Motion to Dismiss Standard

A court should dismiss under Fed. R. Civ. Pro. 12(b)(6) for failure to state a claim only where it appears beyond doubt that plaintiff can prove no set of facts in support of the claim that would entitle plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed. 2d 80 (1957). All allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Dangler v. New York City Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999). However, "[c]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." 2 James Wm. Moore et al., Moore's Federal Practice § 12.34[1][b] (3d ed.1997); see also Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1092 (2d Cir.1995).

When ruling on a motion to dismiss, the court must primarily consider the allegations contained in the complaint. However, the complaint is deemed to include documents attached to the complaint, documents referenced in the complaint, and documents integral to the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002); Fed. R. Civ. P. 10(c). Because the solicitation at issue here is attached as an exhibit to the complaint, the court may consider its terms in ruling on the motion to dismiss.

II. Plaintiff's Claims Under Section 1681b

In Section 1681, Congress made clear that the FCRA is designed, at least in part, to preserve the consumer's privacy in the information maintained by consumer reporting agencies. See 15 U.S.C. § 1681(a)(4). Specifically, Congress stated that "there is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." Id. One means by which Congress effectuated this purpose was prohibiting the release of consumer credit reports unless the release occurs for one of the permissible purposes set forth in 15 U.S.C. § 1681b(a).

Although many of the enumerated permissible purposes set forth in Section 1681b are transactions initiated by the consumer, Section 1681b provides for limited situations in which a consumer credit agency may furnish a consumer report even though the consumer has not initiated or authorized the release. One such instance is when a credit or insurance provider wants to extend a "firm offer of credit" to the consumer. 15 U.S.C. § 1681b(c)(1)(B)(i). The FCRA defines a firm offer of credit as "any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer." 15 U.S.C. § 1681a(l). However, the offer may be conditioned on three specific requirements: (1) the consumer being determined to "meet specific criteria bearing on credit worthiness"; (2) verification "that the consumer continues to meet specific criteria used to select the consumer for the offer"; and (3) the consumer's "furnishing any collateral that is a requirement for the extension of credit." Id. In allowing ...

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