|Banks May Withdraw "Pre-Approved" Credit Cards After Further Credit Review|
|Description||Appeals court held that banks could withdraw their firm offers to extend credit to consumers who were told they were pre-approved for credit cards. After the consumers filled out the form, they authorized a full credit history that gave the banks grounds to withdraw the offer.|
|Key Words||Credit Cards; Offers; Fair Credit Reporting Act; Banks; Credit Reporting Agencies|
|C A S E S U M M A R Y|
|Facts||Richard and Sally Kennedy received pre-qualified offers for credit card accounts from Chase Manhattan and Bank of America. They accepted the offers by returning the applications. The banks, after then obtaining consumer credit reports from Experian and Transunion, notified the Kennedys that based on their credit history they would not receive the credit cards. The Kennedys sued the banks and credit-reporting agencies for violating the Fair Credit Reporting Act (FCRA), contending that the banks failed to honor firm offers of credit that they accepted. They also contend the banks obtained information about their credit history under false pretenses, since they asserted that the Kennedys were pre-approved for credit. The district court dismissed the suit. The Kennedys appealed.|
Affirmed. The FCRA allows creditors to pre-screen potential customers, but only allows the use of limited information at that stage. Under the Act, a creditor must honor a firm offer of credit only if, based on information in the consumer report, the application, or other information bearing on creditworthiness, the consumer meets the criteria initially used to select that consumer for the offer. Firm offers were being made here, but the application form sent stated that consumers had to authorize a full consumer report before a card could be issued. When the banks received a full credit report, they declined to extend credit based on the new information received. That is legal under the FCRA. The banks did not obtain the credit reports under false pretenses, nor did the credit reporting agencies improperly disclose information about the Kennedys.
|Citation||Kennedy v. Chase Manhattan Bank USA, NA, 360 F.3d 833 (5th Cir., 2004)|
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