D.C. District Court Denies Motion To Compel Arbitration Of FCRA Claim Due to Insufficient Declaration

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On January 13, 2021, the U.S. District Court for the District of Columbia denied a motion to compel arbitration filed by First Premier Corp. (“First Premier”) in a Fair Credit Reporting Act case, on the grounds that First Premier did not sufficiently establish that the card agreement containing the arbitration clause was mailed to the cardholder.  Proctor v. First Premier Corp., 2021 U.S. Dist. LEXIS 6502 (D.D.C. Jan. 13, 2021).

The plaintiff, Charnita Proctor sued First Premier and other creditors, alleging that they “reported inaccurate or incomplete information” to Equifax and “failed to conduct a reasonable investigation” of the plaintiff’s credit disputes. 2021 U.S. Dist. LEXIS 6502 at *4-5.  First Premier moved to compel arbitration of the plaintiff’s FCRA claim pursuant to the terms of its credit card agreement, and a declaration of a First Premier employee attesting that “after Plaintiff opened the Account, in First Premier’s normal course of business and regular business practices, it directed its vendor, First Data Resources … to mail via First Class U.S. Mail to the address Plaintiff gave First Premier the applicable credit card for the Account along with the Credit Card Contract and Account Opening Disclosures containing terms and condition governing the Account.”  2021 U.S. Dist. LEXIS 6502 at *7.  Attached to that declaration was an exemplar of First Premier’s Credit Card Contract and Account Opening Disclosures.   

Noting that First Premier did not provide a declaration from its vendor, First Data Resources, attesting to the mailing of the Credit Card Contract and Account Opening Disclosures to the plaintiff with her credit card, the Court found that the record was inadequate to establish the plaintiff’s agreement to arbitrate, even though she admittedly received and used the credit card that was sent to her home.  In so holding, the Court noted that while it was not necessary to provide a declaration from the vendor’s employee who actually put the credit card agreement in the mail to the plaintiff, First Premier should have provided a declaration from the vendor based on sufficient personal knowledge concerning the vendor’s ordinary business practices in carrying out directions from First Premier in mailing credit card materials.   

Lesson Learned:  Card issuers which include arbitration provisions in mailed account agreements should ensure that their vendor agreements require the provision of declarations from their mail vendors verifying their practices in mailing credit card agreements to cardholders and their retention of exemplars of mailed materials, as well as lists of customers and addresses to which such mailings were sent and the dates of such mailings. Consideration should also be given to requiring an applicant’s affirmative consent to arbitration in online application platforms, and to providing arbitration terms, and updates thereto, in monthly account statements with requisite notice that continued use of the card constitutes assent to arbitration absent a timely customer opt-out. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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