## Facts

- Keva Parker sued 1–800 Bar None, A Financial Corporation, Inc. (Bar None) and Gateway Chevrolet, Oldsmobile, Inc. (Gateway) under the Credit Repair Organizations Act (CROA), 15 U.S.C. § 1679 et seq.
- Bar None allegedly contracted with auto dealers to generate “subprime” financing leads and advertised that it could obtain financing for consumers regardless of credit and could “restore” credit.
- Consumers who called Bar None were allegedly referred to local dealers who paid Bar None for referrals.
- Parker alleged she saw a Bar None television advertisement promising same-day car access regardless of bad credit and assistance to “restore” credit.
- After calling, Parker was directed to visit a specific employee at Gateway and to bring billing and income documents and her checkbook.
- At the dealership, Parker was told she did not qualify for ordinary financing and was instructed to write a $6,000 check for the vehicle price despite allegedly lacking sufficient funds.
- Parker signed a “hold check” arrangement involving a check-services company that would hold the check for about 30 days and later arrange payment terms.
- After consulting her bank manager and learning the arrangement could harm her credit, Parker returned the car and stopped making payments.
- Parker alleged defendants misrepresented their services as credit-repair-related and used deceptive practices to induce subprime consumers into risky financing arrangements.

## Issues

1. Whether Bar None plausibly qualified as a “credit repair organization” under CROA based on allegations that it advertised the ability to “restore” consumers’ credit in connection with auto-financing referrals.
2. Whether the complaint stated a plausible CROA claim based on alleged misrepresentations and deceptive conduct directed at consumers with poor credit.

## Decision

- The court denied defendants’ Rule 12(b)(6) motions to dismiss.
- Accepting the complaint’s allegations as true and drawing reasonable inferences for Parker, the court held Bar None could fall within CROA’s definition of a credit repair organization.
- The court held Parker’s allegations were sufficient to proceed past the pleading stage on her CROA theory against Bar None and Gateway.

## Legal Principles

- Under CROA, an entity may qualify as a “credit repair organization” if, for valuable consideration, it provides or represents that it can provide services for the express or implied purpose of improving a consumer’s credit record, history, or rating.
- At the Rule 12(b)(6) stage, the court accepts well-pleaded factual allegations as true and draws reasonable inferences in the plaintiff’s favor.
- Advertising that services will “restore” or improve credit can support CROA coverage even when the business operates in a nontraditional credit setting (such as auto-financing lead generation), if the pleaded facts plausibly fit the statutory definition.
- Allegations that defendants used credit-restoration promises to induce subprime consumers into transactions that could damage credit can state a CROA claim sufficient to survive dismissal.

## Conclusion

The court allowed Parker’s CROA suit to proceed, ruling that allegations of credit-restoration advertising and deceptive practices connected to subprime auto-financing referrals plausibly brought Bar None (and related conduct by Gateway) within CROA’s scope and stated a claim not subject to dismissal at the pleading stage.


Parker v. 1-800 Bar None, A Fin. Corp., Inc., No. 01 C 4488, 2002 WL 215530 (N.D. Ill. Feb. 11, 2002)