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District Court Grants Summary Judgment on Consumer Fraud, Breach Claims

Millett v. Truelink, Inc., 2008 WL 345937 (D.Del. Feb. 7, 2008)

In this opinion the District Court granted the provider of a credit report monitoring service summary judgment on claims that it violated state consumer protection provisions and contractual obligations. Plaintiffs, who were spouses, had purchased a subscription to Defendant’s service, and alleged that Defendant failed to alert them to activity that resulted from theft of the husband’s social security number. Plaintiffs alleged that Defendant had violated Kansas’ Consumer Protection Act (“KCPA”) as well as breached the Credit Monitoring Member Agreement (“Member Agreement”) that Plaintiffs entered into when purchasing the service. Plaintiffs moved for class certification and summary judgment on their KCPA claims, and Defendant moved for summary judgment on the KCPA and several breach of contract claims. The Court found that neither the activity nor the advertising and marketing activities of Defendant were in violation of the KCPA provisions on unconscionable acts and practices, and Defendant was not in breach of the Member Agreement. 

In evaluating Plaintiffs’ KCPA claims, the Court found that Plaintiffs produced no evidence that they did not understand the Member Agreement such that Defendant took advantage of that fact. The Court also rejected Plaintiffs’ argument that Defendant excluded all warranties in violation of the KCPA, finding that the provision Plaintiffs cited applied only to goods, not services. Plaintiffs also failed to produce evidence that they had to accept Defendant’s terms in the Member Agreement, resulting in an excessively one-sided transaction. Nor did Plaintiffs provide evidence of deceptive bargaining practices or unequal bargaining power. The Court also found that there was no evidence that Defendant’s advertising and marketing practices constituted misleading statements on which a consumer would rely, finding that “any reasonable consumer” would understand that Defendant’s service was limited to reporting information indicative of identity theft, not completely protecting them from identity theft. Finally, the Court found that Plaintiffs had not even established damage from the alleged violations of the KCPA. Regarding the breach claims, the Court first found that the wife lacked standing because only her husband was party to the Member Agreement. The Court then found that because the fraudulent activity did not show up on the husband’s credit report, there was no activity to report, such that Defendant did not breach the Member Agreement. The Court further found that the term “credit report” in the Member Agreement was unambiguous and didn’t include all of the husband’s credit files. The Court therefore granted Defendant’s Motion for Summary Judgment. Share

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