Not Getting Best Rate is Adverse Action: Rausch v. Hartford

David A. Szwak

Not Getting Best Rate is Adverse Action: Rausch v. Hartford

Postby David A. Szwak » Wed Feb 01, 2006 8:31 pm

For Your Information

Announced Actions for January 23, 2004

Commission authorization of the staff to file amicus brief: The Commission has authorized the staff of the FTC’s Office of General Counsel to file an amicus brief in the matter of Rausch et al. v. The Hartford Financial Services Group, Inc. et al., No. 03-35695 (9th Cir.). The FTC’s brief supports the plaintiffs and urges reversal of the district court’s decision. In this case, the plaintiffs allege that when a consumer applies for insurance, Hartford requests a consumer report (commonly known as a “credit report”) regarding the consumer. Hartford then uses information in the report to set the initial rate for the insurance it offers the consumer. Specifically, the plaintiffs allege that Hartford set the price for the insurance it offered them higher than the price it would have set if the information in their reports had been more favorable, and that this constituted an “adverse action,” as that term is defined in the Fair Credit Reporting Act (FCRA). In addition, the plaintiffs claim that Hartford violated the FCRA by failing to provide them with adverse action notices, as required by the Act. The district court dismissed the complaint, holding that the FCRA’s definition of adverse action does not encompass setting a higher initial price for insurance.

As detailed in the brief, which is available on the FTC’s Web site as a link to this press release, the Commission has recommended that the Ninth Circuit reverse the district court’s interpretation of “adverse action,” and hold that an insurer takes “adverse action” with respect to a consumer, where, when setting the initial prices of insurance, the insurer offers insurance only at less favorable terms based on the information in the consumer’s credit report. The Commission vote authorizing the staff to file the amicus brief was 5-0. (FTC File No. P042105; staff contact is Lawrence DeMille-Wagman, Office of General Counsel, 202-326-2448.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.


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