Credit Repair Organizations Act and Electronic Funds Transfer Act Claims Denied
On August 11, 2017, the United States District Court for the Central District of Illinois granted our client’s motion to dismiss a putative class action brought on behalf of potential class members under the Credit Repair Organizations Act (CROA) and the Electronic Funds Transfer Act (EFTA). Reid, et al. v. Commonwealth Equity Group, LLC d/b/a Key Credit Repair, 17-cv-3042 (ILCD, August 11, 2017).
Plaintiff entered into an agreement with a company for the purpose of improving his credit profile. Plaintiff alleged that the credit repair organization charged fees for services before they were fully performed, misleadingly guaranteed that plaintiff’s credit score would improve if plaintiff followed the company’s advice, and required plaintiff to waive his rights under the EFTA to cancel preauthorized electronic fund transfers.
In a 21-page opinion, the Federal District Court found that plaintiff failed to state claims under the CROA and the EFTA. The Federal District Court held that plaintiff failed to allege that he was charged for any services that had not been performed, and that plaintiff had not alleged a plausible claim that the statement that the company guaranteed to improve his credit score if he followed the companys advice was misleading or untrue. The Federal District Court also held that the parties’ Service Agreement contradicted plaintiff’s alleged EFTA claim because the written agreement addressed only cancellation of the Service Agreement, but said nothing about plaintiff’s right to stop electronic payments.
TDR lawyers Tim Hudson and Jordan Wilkow secured this important opinion.