[Federal Register: January 21, 2003 (Volume 68, Number 13)]
[Notices]
[Page 2775-2776]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja03-60]
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FEDERAL TRADE COMMISSION
[Docket No. 9304]
Quicken Loans Inc.; Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the complaint and
the terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before January 29, 2003.
ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580. Comments filed in electronic form should be
directed to: consentagreement@ftc.gov., as prescribed below.
FOR FURTHER INFORMATION CONTACT: Bradley Blower or Thomas Kane, FTC,
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW.,
Washington, DC 20580, (202) 326-3224.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and section
3.25(f) of the Commission's Rules of Practice, 16 CFR 3.25(f), notice
is hereby given that the above-captioned consent agreement containing a
consent order to cease and desist, having been filed with and accepted,
subject to final approval, by the commission, has been placed on the
public record for a period of thirty (30) days. The following Analysis
to Aid Public Comment describes the terms of the consent agreement, and
the allegations in the complaint. An electronic copy of the full text
of the consent agreement package can be obtained from the FTC Home Page
(for December 30, 2002), on the World Wide Web, at ``http://www.ftc.gov/os/2002/12/index.htm.
'' A paper copy can be obtained from
the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue,
NW., Washington, DC 20580, either in person or by calling (202) 326-
2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. Comments filed in paper form should
be directed to: FTC/Office of the Secretary, Room 159-H, 600
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains
nonpublic information, it must be filed in paper form, and the first
page of the document must be clearly labeled ``confidential.'' Comments
that do not contain any nonpublic information may instead be filed in
electronic form (in ASCII format, WordPerfect, or Microsoft Word) as
part of or as an attachment to e-mail messages directed to the
following e-mail box: consentagreement@ftc.gov. Such comments will be
considered by the Commission and will be available for inspection and
copying at its principal office in accordance with section
4.9(b)(6)(ii) of the Commission's Rules of Practice, 16 CFR
4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement, subject to
final approval, to a proposed consent order from Quicken Loans Inc. The
proposed order would settle charges that Quicken
[[Page 2776]]
Loans violated Section 615(a) of the Fair Credit Reporting Act
(``FCRA''), 15 U.S.C. 1681m(a), and Section 5 of the Federal Trade
Commission Act. Section 615(a) requires that a credit grantor who takes
adverse action with respect to a consumer, based in whole or in part on
information contained in a credit report (``consumer report''), notify
the consumer of the adverse action as well as the identity of the
credit bureau (``consumer reporting agency'') that produced the report,
so the consumer can identify and correct any inaccuracies in the
report.
The proposed consent order has been placed on the public record for
thirty (30) days for receipt of comments by interested persons.
Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement and take other appropriate action or make
final the agreement's proposed order.
According to the Commission's Complaint, for a period of
approximately one year, Quicken Loans offered loans to consumers
through its website. Quicken Loans invited consumers to submit
information, such as their income and assets, and the loan amount, down
payment and type of loan sought. Consumers then were invited to request
that Quicken Loans either ``prequalify'' the consumer for a loan based
solely on information the consumer had entered, or ``preapprove'' the
consumer for a loan based on the consumer's consumer report, as well as
the consumer-supplied information. To select the preapproval option,
consumers were required to click a radio button next to the statement
``Order my credit report and use it to preapprove me for a loan.''
According to the Complaint, by selecting this option, consumers were
filing applications for preapproval of a loan.
For those consumers who requested preapproval, Quicken Loans
obtained consumer report from consumer reporting agencies and used the
reports, along with consumer-supplied information, to evaluate the
consumers' creditworthiness for any of its online loan products. For
those consumers whom Quicken Loans preapproved for one of its online
loan products, respondent provided an online preapproval letter
containing the specific terms (e.g., loan amount, interest rate,
points, and APR) of the loans for which the consumers were preapproved.
Those consumers whom respondent did not preapprove for one of its
online loan products received an online advisory informing them that,
``[b]ased on the information you have provided, it appears that you
have unique borrowing needs.'' Quicken Loans invited these consumers to
click a button reading ``NEXT STEP'' to permit a Quicken Loans loan
consultant to contact them about other possible Quicken Loans loan
options. The Commission's Complaint alleges that the message
communicated through the advisory was that consumers' online
applications for preapproval had been denied. As a result, many
consumers who received this advisory left the website without
submitting contact information. Consumers who received the ``unique
borrowing needs'' advisory but did not then submit contact information
online received no further contact from respondent. The Complaint
alleges that, through the actions described above, Quicken Loans took
adverse action with respect to consumers in some instances, based in
whole or in part on information contained in consumer reports, but
failed to provide the notice required by Section 615.
Part I of the proposed order requires that whenever Quicken Loans
takes adverse action with respect to a consumer's application for
credit, based either wholly or partly on information in a consumer
report, Quicken Loans must provide the consumer with a notice that
complies with Section 615(a). Part I also provides that the Commission
would not view Quicken Loans' failure to grant an online request for
preapproval as an adverse action if the company meets certain specific
requirements, which include that (1) Quicken Loans provides a clear and
conspicuous disclosure in close proximity to the preapproval offer that
preapproval may be granted online or offline; and (2) if Quicken Loans
determines it cannot grant preapproval online because it needs
additional information, it will notify the consumer that (a) the
request for preapproval has not been denied, but rather that Quicken
Loans needs additional information from the consumers, and (b) if the
consumer submits the additional information, Quicken Loans will
determine whether to grant the request and communicate the decision to
the consumer.
Parts II through VI of the proposed order are reporting and
compliance provisions. Part II requires that Quicken Loans maintain and
make available for Federal Trade Commission inspection and copying
documents demonstrating compliance with Part I of the order. Part III
requires dissemination of the order now and in the future to persons
with responsibilities relating to the subject matter of the order. Part
IV ensures notification to the FTC of changes in corporate status. Part
V mandates compliance reports within sixty (60) days after service of
the order and at such other times as the FTC may require. Part VI is a
provision ``sunsetting'' the order after twenty (20) years, with
certain exceptions.
The purpose of this analysis is to facilitate public comment on the
proposed order, and is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
This proposed order, if issued in final form, will resolve the
claims alleged in the complaint against the named respondent. It is not
the Commission's intent that acceptance of this consent agreement and
issuance of a final decision and order will release any claims against
any unnamed persons or entities associated with the conduct described
in the complaint.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-1215 Filed 1-17-03; 8:45 am]
BILLING CODE 6750-01-M