CDIA alleges Minnesota law violates federal law

The Consumer Data Industry Association has filed a lawsuit challenging a newly enacted Minnesota law that effectively bans competing mortgage loan offers to the state’s consumers and, in doing so, challenges the operation of nationwide lending practices established under federal law.

Currently, Minnesotans benefit from a national credit marketplace protected by federal law that allows them to purchase products of their choice. But on Aug. 1, Minnesotans won’t be able to use their buying power to evaluate certain competing loan offers. On this date, a new state law will prohibit the use of pre-screened mortgage products that allow consumers to compare timely loan offers.

“We are deeply disappointed in this outcome after having worked with the legislature and attorney general,” said Stuart Pratt, president/CEO of the CDIA, in a statement. “Our members are in the business of providing products and services that empower consumers.

“Consumers who want to save money and who comparison shop are far less likely to fall for harmful, predatory lending practices,” he said. “We must preserve the proven benefits of national standards set forth in federal law.”

CDIA is the international trade association that represents more than 350 consumer data companies. CDIA members represent the nation’s leading institutions in the credit reporting, mortgage reporting, check verification, fraud prevention, risk management, employment reporting, tenant screening, and collection services businesses.

The new state law is an apparent attempt to address problems in the mortgage lending market, namely, a few mortgage brokers who are using telephone calls to mislead consumers, Pratt added.

“We have supported effective laws in other states which addressed fraudulent behavior and hoped the Minnesota Attorney General would consider a similar law,” Pratt noted. “Instead she opted for a law that will restrict the choices that Minnesotan’s have to save money. It’s like enacting a ban on home improvement loans as a solution to deceptive contractors.”

The lawsuit seeks a restraining order and injunction on the enforcement of the Minnesota law that takes effect Aug. 1. CDIA is asking the courts to adjudicate this matter in a timely manner so that the operation of federal law is preserved and the state’s consumers do not become disenfranchised in the mortgage market.

“Let’s preserve national standards that provide for an open and fair marketplace for the state’s consumers,” Pratt concluded. “Consumers want the buying decision in their own hands. If a consumer doesn’t want a lender to call them with an offer, they need only to register with the Federal Trade Commission’s Do-Not-Call list. Our members respect this choice and voluntarily remove all telephone numbers when a consumer is registered with the FTC.”

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