The United States District Court for the Northern District of Illinois denied a creditor’s motion to dismiss finding it could not conclude from the four corners of the offer that the creditor was offering anything of value. Simpson v. Juniper Bank, No. 06 C 665 (N.D. Ill. Feb. 8, 2007). The case involved a “pre-qualified” offer for a platinum MasterCard.

    Although the court agreed that an offer need not specify every material term of credit in order to establish a firm offer of credit, in the context of an offer for a credit card the court found that specifying three varying interest rates was not sufficiently specific for the consumer to determine whether the offer had value.

    The court acknowledged that the offer specified a number of terms: the annual fee, minimum finance charge, rates for cash advances, the grace period applicable to purchases, the method of computing the balance for purchases and the applicable transaction charges, a number of other terms were undetermined. The undetermined terms noted by the court based on the offer included the fact that the APR for balance transfers and convenience checks was variable and could be set at 11.99%, 15.99% or 18.99% and the default rate was listed as “up to 30.24% variable” to be determined by further information from the plaintiff’s account history and performance on accounts with other creditors. The court also found it significant that the offer did not specify any minimum amount of credit.

    The court found the bank’s reservation of the right to change the terms of the offer, combined with a wide range of possible interest rates and no indication of the minimum credit available led to the conclusion that the mailer, when viewed as a whole, did not disclose enough of the material terms for the recipients to determine whether the offer had value to them.

    The court held that plaintiff had adequately stated a claim for a violation of the Fair Credit Reporting Act necessary to survive a motion to dismiss.

    This case is one in a series of cases evaluating whether a mailer is a “Firm Offer of Credit” under the FCRA. As reported in Alerts dated April 16, 2006 and December 11, 2006, the courts are reaching inconsistent conclusions in these cases, making it difficult to predict what is required for a firm offer of credit.

    • Elizabeth Anstaett and Mike Tomkies