"more predictive, consistent, stable" is puffery, but misrepresentation of what credit score you'd get isn't

Fair Isaac Corp. v. Trans Union, LLC, 2019 WL 1436018, No. 17-cv-8318 (N.D. Ill. Mar. 30, 2019)

FICO sued TransUnion for breach of contract, breach of good faith and fair dealing, copyright infringement, conversion, and false advertising. Since 1989, TransUnion, one of three major credit bureaus, has been licensed to use FICO’s scoring algorithm to sell credit scores (FICO Scores) to its customers. TransUnion also uses FICO’s software in applying the algorithm to an individual’s credit data.

In 2015, FICO allegedly learned that TransUnion committed several contractual infractions: underpaid royalties, copyright infringement and conversion, and breach of several written agreements, as well as false advertising related to VantageScore, a FICO-rival credit company created by TransUnion, Experian, and Equifax. 

The breach of contract/copyright claims survived a motion to dismiss. Conversion claims failed: it is well established that “Illinois courts do not recognize an action for conversion of intangible rights.” Even if, as FICO argued, its conversion claims were connected to “tangible” written code, conversion as a cause of action requires “an absolute right to immediate possession of the property” which TransUnion refused to return. But the agreements at issue, as alleged, provided for TransUnion to use the software and did not provide for their return at the termination of the parties’ agreement.

False advertising: VantageScore’s website contained statements such as: “Getting a card? Run your credit check before the bank does,” and “Buying a car? Kick the tires on your credit before the dealer does.” The ads had links labeled “Show Me My Score [and] Report Now” that would produce VantageScore in-house scores. FICO alleged that these statements mislead reasonable customers to believe that they would be “obtaining the same score [FICO Scores] that their lender would obtain and rely upon in deciding whether to extend them credit.” Further, an ad claiming that VantageScore 3.0 “generates consumer credit scores that are more predictive, more consistent, and more stable by using industry-leading analytics to parse credit files differently than older, other models do” falsely implied that VantageScore outperformed FICO scores.

TransUnion first pointed to Fair Isaac Corp. v. Experian Information Solutions Inc., 645 F. Supp. 2d 734 (D. Minn. 2009), as mandating issue preclusion. But though FICO alleged false advertising there, “the difference in context, timing, and language of the advertisement distinguish the issues.” For example, the statements at issue in Experian included: “Most lenders would view your creditworthiness as very poor,” “Know where you stand no matter which credit bureau your lender checks,” “the same type of score that lenders see,” and “Most lenders offer their ‘good’ rates to consumers in this category.” Experian found that these statements did not imply “that an appreciable number of lenders use the in-house scores of VantageScore in making lending decisions.”

This case was different.  In Experian, FICO claimed that the prior statements falsely conveyed that many lenders use VantageScore’s in-house scores, but here it argued that VantageScore’s ad implies that consumers were actually getting FICO scores. Second, this case doesn’t involve statements about a consumer’s specific score (poor/good/etc.). Nor did Experian “consider the internet display’s effect in causing confusion between receiving FICO Scores as opposed to VantageScore in-house credit scores.” No estoppel would apply.

That said, the superiority statements were puffery as a matter of law. Claims that VantageScore’s model “generates consumer credit scores that are more predictive, more consistent, and more stable by using industry-leading analytics to parse credit files differently than older, other models do” “are clearly overexaggerated marketing claims … One would expect these types of subjective nonquantifiable statements to be posted on a company’s website. That is the very purpose of advertisement.” [The very purpose of ads is to puff?  Sigh. There’s also an interesting contrast here to the lawyer advertising case I just wrote about, where claims that a legal case would be simple/easy were not held to be puffery.]