Attorneys working with ClassAction.org are looking into whether Fingerhut was authorized to open new credit accounts on its customers’ behalf when it switched financing partners in March 2022.
Although Fingerhut represented that customers’ WebBank/Fingerhut Advantage credit accounts would be “transitioned” to WebBank/Fingerhut Fetti credit card accounts, many customers have said they didn’t realize Fingerhut would be opening a brand-new credit account on their behalf and closing the old one – which can negatively affect a person’s credit.
The attorneys believe Fingerhut may not have had the authority to open these new accounts and that consumers may be owed up to $1,000 under the Fair Credit Reporting Act.
2022 Fingerhut Fetti Credit Account Openings
Fingerhut markets its online store as a place for customers with even a poor credit history to open an account with the company and build credit by paying for products on a monthly basis.
Earlier this year, Fingerhut announced that its agreement with its financing partner was ending, and that the company was “required” to issue its Fingerhut Advantage customers a new credit account. According to Fingerhut’s website, the change was “a business formality” and would not require any action on the customer’s part for their account to be “transitioned” to the newly named Fingerhut Fetti credit account.
Fingerhut told its customers that they would have “two separate accounts now” and that they could begin using their Fingerhut Fetti credit account on April 12, 2022.
Fingerhut customers have reported, however, that the opening of the new account negatively affected their credit. Some customers say they were never notified beforehand and would not have authorized the new account, while others say Fingerhut didn’t properly warn them about the effect the change would have on their credit.
How Could Opening a New Account Affect My Credit?
Your credit score is determined by several different factors, but opening a new credit account can sometimes have a significant impact on your score.
According to Experian, one of the major credit bureaus, your credit history length makes up 15 percent of your FICO score. Credit history length is determined by the ages of your oldest and newest credit accounts and the average age of all your credit accounts. Opening a new account reduces the average age of your accounts, and could cause your credit score to take a hit, especially if you only have a few accounts or you’ve recently opened an account.
Similarly, closing an older credit account can also negatively impact your credit score as it lowers the average age of your accounts.
Building credit and repairing bad credit can take a long time – and require the right timing – and some Fingerhut customers have complained that the company ruined or hampered their credit-building efforts by opening a Fingerhut Fetti account on their behalf (and closing their older Fingerhut Advantage account) at a time when they weren’t looking for new credit.
Fingerhut Customers Complain Online
Many Fingerhut customers have turned to online forums to voice their complaints about how the company handled switching financing partners and closing and opening credit accounts on their behalf.
The following is a sampling of those complaints [sic throughout]:
Hello I logged in and saw the finger hut fetti account I never applied for this and it dropped my credit score 45 points when Im in the middle of applying for a Mortgage, I didnt authorize any new accounts so Im confused what happened and why it dropped my score the only new activity on my credit account was from finger hut, thats why Im confused since I havent bought anything or applied for anything.”
— SamMomaBear,Reddit.com
… I recieved only one letter from them that was very short and sweet informing that the name was changing but they’re still the same fingerhut and you’ll still have the same account. That’s what they told us. It said nothing about closing & opening accounts without our approval! It’s so unnecessary too, I see no reason they needed to do this.”
— fondfox,Reddit.com
I have been working hard to raise my score. The new line and closing the account ruined all of my hard work over 2 yrs. I was fine with the switch, I just didn’t think it would count as a closed account because I didn’t do anything to close it.”
— Jock0721,Reddit.com
My score droppe[d] 50 points. I WAS trying to buy a car and had no idea that this even happened. I just thought they changed their name as there was no mention of a whole new line of credit being opened. No letter was sent to me...”
— Embarrassed-Bus7334,Reddit.com
It happened to me too. I only kept the account open and made a purchase a year to keep my credit score up. Them closing it hurt my credit history then reopening an account really hurt my average age. This is crap. They advertise how to build credit with them okay.”
— Nearby-Sample-9723,Reddit.com
The exact same thing just happened to me. I had the account for 15 years. It was my oldest account. They closed my account and my score dropped 60 points out of the damn blue. I’m livid. I barely used the account and only kept it open because I didn’t want to close it due to it being the oldest account...”
— RealitygirlM2M,Reddit.com
I'm within 45 days of closing on a mortgage. My mortgage scores just did meet 630 for CONV, though my other score models are in the 700s. This is after nearly 2 years of building my credit scores from the 500s and taking major hits because of student loans that had gotten behind. Anyway, I’ve worked REALLY hard to get my scores where they are and to have an amount that is almost 6 years old do this at this very critical time for me is bogus...”
— marshagl,FICOForums.myFICO.com
Is This a Lawsuit? What Am I Signing Up For, Exactly?
You are not signing up for a lawsuit, but rather a process known as mass arbitration. This is a relatively new legal technique that, like a class action lawsuit, allows a large group of people to take action and seek compensation from a company over an alleged wrongdoing. Here is a quick explanation of mass arbitration fromour blog:
[M]ass arbitration occurs when hundreds or thousands of consumers file individual arbitration claims against the same company over the same issue at the same time. The aim of a mass arbitration proceeding is to grant relief on a large scale (similar to a class action lawsuit) for those who sign up.”
Fingerhut’s terms of use require that users must resolve all claims and disputes through arbitration, a form of alternative dispute resolution that takes place outside of court before a neutral arbitrator, as opposed to a judge or jury. It’s for this reason that attorneys working with ClassAction.org have decided to handle this matter as a mass arbitration rather than a class action lawsuit.
How Much Does This Cost?
It costs nothing to sign up, and you’ll only need to pay if the attorneys win money on your behalf. Their payment will come as a percentage of your award.
If they don’t win your claim, you don’t pay.
How Much Money Could I Get?
There are no guarantees as to how much money you could get or whether your claim will be successful. The Fair Credit Reporting Act, however, states that consumers may be able to collect between $100 and $1,000 per violation.
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