## Facts

- Keith H. Gill and Richard Murkey operated credit-repair businesses that sold services purportedly designed to improve consumers’ credit records for a fee.
- Since at least 1995, the businesses marketed that they could remove “any” negative information from consumers’ credit reports, including accurate adverse information.
- The businesses advertised “free consultations” but required substantial advance payments (including up to roughly half of the fee up front) and continued billing consumers despite a lack of successful results.
- The core method used was sending mass dispute letters to credit reporting agencies disputing all negative items on a consumer’s report using stock assertions of inaccuracy.
- Credit reporting agencies generally did not remove the disputed accurate negative information, yet defendants continued to charge consumers.
- The Federal Trade Commission sued in federal district court alleging violations of the Credit Repair Organizations Act (CROA) and § 5 of the Federal Trade Commission Act (FTC Act).
- The district court granted summary judgment for the FTC, permanently enjoined defendants from participating in the credit-repair business, and ordered $1,335,912.14 in equitable monetary relief (consumer redress/restitution/disgorgement).
- On appeal, defendants challenged liability, certain summary-judgment evidentiary and scheduling rulings (as to Murkey), and the scope of the injunction and monetary award.

## Issues

1. Whether defendants were “credit repair organizations” under CROA and, if so, whether their representations and advance-fee practices violated CROA.
2. Whether defendants’ marketing and billing practices constituted deceptive acts or practices under § 5 of the FTC Act.
3. Whether the district court abused its discretion in excluding unauthenticated exhibits, denying a continuance, and denying leave to submit late supplemental evidence in opposition to summary judgment.
4. Whether the permanent injunction barring participation in the credit-repair business and the $1,335,912.14 equitable monetary award exceeded the district court’s equitable authority or otherwise constituted an abuse of discretion.

## Decision

- The Ninth Circuit affirmed summary judgment for the FTC on CROA and FTC Act liability.
- The court held that defendants’ businesses fit CROA’s definition of a credit repair organization and that defendants made untrue or misleading representations about their services and took prohibited advance payments.
- The court held defendants’ claims that they could remove any negative credit information were likely to mislead reasonable consumers and were material, establishing deception under § 5 of the FTC Act.
- The court found no abuse of discretion in the district court’s management of summary-judgment proceedings, including exclusion of unauthenticated documents and denial of Murkey’s requests for a continuance and late supplementation.
- The court upheld the permanent injunction and affirmed the $1,335,912.14 award as permissible equitable relief supported by the record.

## Legal Principles

- CROA applies to entities that, for a fee, offer services for the purpose of improving a consumer’s credit record, including by claiming the ability to remove negative credit-report information.
- Under CROA, untrue or misleading representations about credit-repair services and the taking of payment before full performance can constitute statutory violations.
- A practice is deceptive under § 5 of the FTC Act if it is likely to mislead reasonable consumers and the representation or omission is material.
- On summary judgment, evidence submitted to create a factual dispute must be admissible in form or capable of being presented in admissible form; unauthenticated exhibits may be excluded.
- Upon establishing FTC Act violations, federal courts may exercise broad equitable authority to issue injunctive relief to prevent future violations and to order equitable monetary relief such as restitution, consumer redress, or disgorgement when supported by the evidence.

## Conclusion

The Ninth Circuit concluded that defendants’ credit-repair operation made materially deceptive claims and used improper billing practices in violation of CROA and the FTC Act, and it affirmed summary judgment, a permanent industry ban, and $1,335,912.14 in equitable monetary relief.


FTC v. Gill, 265 F.3d 944 (9th Cir. 2001)