On July 5, the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of the Federal Trade Commission against Credit Bureau Service, LLC f/k/a/ MyScore LLC (“CBS LLC”) and its owner, Michael Brown, on charges that they deceived consumers with fake rental property ads and deceptive promises of “free” credit reports, and then improperly enrolled consumers in an expensive monthly credit monitoring service. Judgment was entered in the FTC’s favor for $5.2 million. A copy of the summary judgment order can be found here.

The FTC’s complaint alleged that CBS LLC and Brown posted Craigslist ads for non-existent rental properties, then impersonated property owners and offered property tours if the consumers would agree to obtain credit reports and/or scores from their websites. The complaint also alleged that the defendants claimed they were providing free credit reports and scores when, in actuality, their systems would automatically enroll consumers in $29.94 per month credit monitoring services without consumers’ knowledge.

The summary judgment order found that CBS LLC and Brown violated the FTC Act, the Restore Online Shoppers’ Confidence Act, the Fair Credit Reporting Act, and the Free Annual File Disclosures Rule. It also:

  • Entered a permanent injunction that bans the defendants from selling any credit monitoring service with a negative option feature and from misrepresenting material facts about any product or service;
  • Instructs the defendants how they must monitor their affiliate marketers in the future;
  • Requires the defendants to investigate any complaints about affiliate marketers and end the affiliation if they find practices the order prohibits;
  • Mandates that the defendants make specific disclosures when selling any product or service with a negative option feature and when offering free credit reports; and
  • Bars the defendants from using billing information to obtain payments from consumers without first obtaining their express informed consent.

Troutman Sanders will continue to monitor these developments and provide any further updates as they are available.