Legal Opinions - U.S. District Court, Maryland: January 28, 2008

Daily Record, The (Baltimore), Jan 28, 2008

The statutory definition of FCRA only requires that Capital One have made an offer of credit which will be honored if Farrow meets the relevant and statutorily permissible criteria. See 15 U.S.C. [section]1681b(a). This definition "differs from what might be considered a firm offer in other business contexts or at common law in that such an offer may be conditioned on the consumer's meeting certain requirements after the offer is made." Soroka, 500 F. Supp. 2d at 221-22.

Those requirements include whether the consumer meets the creditworthiness criteria established by the lender before the mailing of the offer, verification that the consumer continues to meet that criteria, and the furnishing of collateral. Id. at [section]1681a(l).

The mailer in this case clearly stated that, in order to accept the offer of credit, the consumer must have a minimum monthly income of $1,500, must be 18 years of age, must not be in open bankruptcy, and must provide acceptable property as collateral. Farrow did not allege that Capital One would not have extended him credit had he applied and met the appropriate criteria.

Moreover, Farrow failed to name any disclosures that are required by FCRA but not made in the mailer he received from Capital One. Because FCRA lists other required disclosures in [section]1681m(d), under the statutory construction canon of inclusio unius est exclusion alterius, courts "should not imply any additional disclosure requirements." Phinn, 502 F. Supp. 2d at 629.

"If Congress had wanted to require that loan amounts, interest rates, or payback times be specified in a 'firm offer,' it could have done so." Dixon v. Shamrock, 482 F. Supp. 2d 172, 176 (D. Mass. 2007). Additionally, some courts have pointed out that "[e]very consumer and every lender has a common understanding that [] loans are made for a definite period of time, [and] that banks charge interest for lending money," see, e.g., Poehl v. Countrywide Home Loans, Inc., 464 F. Supp. 2d 882, 886 (E.D. Mo. 2006), a fact which makes the mandatory disclosure of such terms in the initial credit offer less necessary.

Significantly, the disclosure of material terms such as interest rates and repayment periods is specifically covered by a different statute -- the Truth in Lending Act. See Soroka, 500 F. Supp. 2d at 222.

The fact that FCRA is silent on the issue of material terms, and that TILA is very clear about what is required, suggests that Congress did not intend to require that firm offers of credit under FCRA contain all material pricing information. Thus, Capitol One's motion for judgment on the pleadings was granted.

COMMENTARY: The 4th Circuit has not adopted the test initially formulated by the 7th Circuit, under which a firm offer of credit must convey some value to the consumer sufficient to lift it above a sham or solicitation. See, e.g., Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004).

Even the 7th Circuit, however, does not require that "a 'firm offer of credit'... meet a state law definition of an offer." Sullivan v. Greenwood, 499 F. Supp. 2d 83, 87 (D. Mass 2007).