The CFPB and the Arkansas Attorney General announced that they filed a proposed stipulated judgment and order settling their Fair Credit Reporting Act (FCRA) and Consumer Financial Protection Act of 2010 (CFPA) claims against Alder Holdings, LLC, a home-alarm company that extends closed-end credit to its customers by providing them the right to defer payment for Alder’s alarm and security-system equipment over the life of a long-term contract.
The Complaint, filed in an Arkansas federal district court, alleges that Alder charged higher activation-fees for customers who had lower credit scores, but failed to provide them with the required risk-based pricing notice in violation of the FCRA. 15 U.S.C. § 1681m(h)(1) requires that a company give consumers notice when it provides consumers with less favorable credit terms based on a review of their credit reports.
Additionally, the Arkansas Attorney General alleged that by violating the FCRA, Alder also violated § 1036(a)(1)(A) of the CFPA, which makes is unlawful for covered persons to “commit any act or omission in violation of a Federal consumer financial law.”
If entered by the court, the stipulated final judgment and order will require Alder to pay a $600,000 civil money penalty, to provide proper risk-based pricing notices under the FCRA, and to submit a comprehensive compliance plan to the Bureau.