Stout v. FreeScore

If one offers a service that is represented, through advertisements or otherwise, as having the purpose to provide advice or assistance with regard to improving a consumer’s credit history, score, or record, then it will be deemed a “credit repair organization” under the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq.

Kevin Stout filed a class action lawsuit in district court against FreeScore under the Credit Repair Organizations Act, 15 U.S.C. § 1679, et seq. (“CROA”). The district court dismissed Stout’s claim because it ruled that FreeScore did not qualify as a credit repair organization under CROA. A credit report organization is defined in Section 1679a(3) of the CROA. Simply, one who sells, provides, performs, or represents that it can sell, provide or perform services for the purpose of either improving credit reports or advising a consumer on improving credit reports is a credit repair organization. FreeScore argued that because it provided information to allow subscribers to improve credit scores, and it did not independently improve subscribers’ credit scores, it did not comport with the definition. The panel held otherwise, stating that, according to the plain language and purpose of the CROA, one will fall under the statutory definition of “credit repair organization” if it “. . . only represents that it can or will sell, provide, or perform a service for the purpose of providing advice or assistance . . . with regard to improving a consumer’s credit record, [] history, or [] rating.” The panel determined that the “overall net impression” of FreeScore’s website and television advertisements was the sale of a service that would allow a consumer to improve credit. Furthermore, “[t]he fact that FreeScore has a self-serving disclaimer [in its fine print] that it is not a credit repair organization does not cure the representations it made that it offers services that could improve a consumer’s credit.” The issue of whether FreeScore actually violated the CROA was remanded to the district court. REVERSED AND REMANDED.