Judge keeps alive case against Lancaster company using 'credit bureau' in its name despite not being a credit bureau

By Charmaine Little | Dec 5, 2018

PHILADELPHIA - On Nov. 20, the U.S. District Court for the Eastern District of Pennsylvania denied a motion for summary judgment for a company accused of falsifying itself as a credit bureau and sending misleading material.

Judge Edward Smith ruled on the case.

David Cunningham, Jerome Brown, Marcella Emery and Ronald Emery sued Credit Bureau of Lancaster County Inc. (CBLC) after they each got “allegedly materially deceptive and misleading debt collection letter” from CBLC. 

They said the idea that CBLC presented itself as a credit bureau is what made the information they received deceptive. While CBLC responded with a motion for summary judgment, the court agreed with the plaintiffs and denied it.

The issue is that while CBLC was once a credit bureau, it hasn’t been once since it sold its actual credit reporting division to TransUnion in 2000. So keeping the “credit bureau” portion of its name is allegedly what makes it misleading, and causes others to think that it has the ability to boost or lower their credit scores and relay any changes to creditors. 

CBLC said that it is now a consumer reporting agency under the Fair Credit Reporting Act and claimed that acting as a CRA made the distinction between it and a credit bureau hazy. It also said the plaintiffs don’t have constitutional standing since they failed to claim an injury-in-fact according to Article III of the U.S. Constitution.

The court pointed out that plaintiffs did their part in alleging a particularized injury when they stated they each got letters addressed to them that were supposed to be an attempt to collect their debts. While CBLC said merely using “credit bureau” in its name should not have harmed the plaintiffs, the court pointed to a previous case that determined “a plaintiff need not actually suffer the threatened harm, so long as the plaintiff faced a risk of real harm.” 

And the court said they did just that when they alleged the “credit bureau” term in the name of the company and the logo was misleading and tricked them into thinking CBLC had control over certain aspects of their financial situations.

As for whether CBLC is an actual credit bureau, the court pointed out that the Federal Trade Commission has not recognized a CRA as a credit bureau when it comes to the law. 

In fact, while FTC regulations say an organization that’s not a CRA isn’t allowed to use “credit bureau” in its name, it’s not clear that being a CRA gives a company the green light to use “credit bureau” in its name either. It also pointed out previous case laws have not determined that CRA’s can act as credit bureaus.

Ultimately, the court decided there is enough evidence for potential trickery because “if a debtor believes that a debt collector also operates as a credit bureau that can unilaterally adjust the debtor’s credit history and score and potentially report those changes to creditors, that debtor may very well be more likely to pay the debt quickly.” 

Considering this, the court decided not to dismiss the case.

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