(CN) - The 9th Circuit resurrected class action claims against FreeScore.com, finding Friday that the website is a "credit repair organization" as defined by federal law.
California resident Kevin Stout sued FreeScore in 2010, alleging that the company, whose ads feature actor and political commentator Ben Stein, violated the Credit Repair Organizations Act (CROA) with its television and online marketing.
FreeScore moved to dismiss the potential class action on the basis that it was not a credit repair organization and that it had "only made representations that it could provide information regarding a consumer's credit, and not that it could 'improve' a consumer's credit."
Finding that the company had indeed made no promises to improve credit and thus was not liable under the CROA, U.S. District Judge Manuel Real tossed Stout's claims out of court in Los Angeles.
A three-judge appellate panel reversed on Friday with a contrary conclusion.
"FreeScore falls squarely within the CROA's definition of a 'credit repair organization,'" U.S. District Judge Brian Cogan wrote for the panel, sitting by designation from Brooklyn.
"From the plain language of the statute, it is clear that under the CROA, a person need not actually provide credit repair services to fall within the statutory definition of a credit repair organization," Cogan added. "Instead, the person need only represent that it can or will sell, provide, or perform a service for the purpose of providing advice or assistance to a consumer with regard to improving a consumer's credit record, credit history, or credit rating."
Remanding the case for the lower court to determine if FreeScore actually violated the act, Cogan noted that "yhe fact that FreeScore has a self-serving disclaimer 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."
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