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Sunday, June 23, 2024 | Back issues
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Circuit Nixes Challenges |To ‘Token’ Lines Of Credit

CHICAGO (CN) - The 7th Circuit dismissed the consolidated appeals of consumers who claimed that promotional offers made by Cingular Wireless, KeyBank and Capital One amounted to "token lines of credit" that violated the Fair Credit Reporting Act.

Under the act, merchants may obtain lists of consumer names and addresses from credit-reporting bureaus, so long as they use the information to make a "firm offer of credit." If the offer does not benefit the consumer in some way, the buyer views it as a mere solicitation or advertisement.

This concept of consumer value helps maintain "the balance Congress carefully struck between a consumer's interest in privacy and the benefit of a firm offer of credit for all those chosen through the pre-screening process," Judge Easterbrook wrote.

With that in mind, the court determined that the "free phone" that Cingular offered with a two-year contract, KeyBank's home-equity financing and Capital One's Visa cards constituted "firm offers of credit" under the FCRA.

Easterbrook explained that these and similar claims fail because the FCRA "calls for a firm offer of credit but not a valuable firm offer of credit."

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