While access to the credit profiles of consumers is one of the most effective methods of targeting credit, finance, and insurance demographics, there are very specific laws which regulate the purposes for which such access is permissible. These “permissible purposes” are very narrow. The laws governing them are primarily (but not entirely) contained in the Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transaction Act (FACTA) and fall under the enforcement jurisdiction of the Federal Trade Commission (FTC). While governmental oversight is to be considered when utilizing pre-screen credit scored data, another factor has arisen in the form of predatory law firms which have made a cottage industry of representing professional plaintiffs in “shake-down” class action lawsuits alleging violations of the FCRA. While the vast majority of these lawsuits are without merit, the cost of defending such suits can be prohibitive. Moreover, the possibility of the plaintiff prevailing, no matter how remote, is a factor that must be considered when determining a course of action in responding to these mostly nuisance lawsuits. If an attorney is willing to settle for $10,000 and the defendant knows it will cost him that much just to have an attorney answer the complaint, on top of which, losing could cost hundreds of thousands of dollars or more, settling seems the prudent option. On the other hand, if the plaintiff’s attorney believes that the dealer is willing to go all the way in vigorously defending the suit, then the plaintiff attorney has to consider whether the case is worth pursuing, especially since one of these cases wherein the defendant prevailed could bring the whole house of cards down.

This study will address the existing laws as well as precedent setting decisions which have modified and in many cases, narrowed the focus of the practical applications of such laws as they relate to the marketing industry, particularly, direct mail.