A recent class-action lawsuit filed in Hennepin County District Court accuses the Fingerhut mail-order company of opening thousands of accounts without permission and damaging credit scores.
Class-action lawsuit filed against Eden Prairie-based Fingerhut
Company accused of opening thousands of unauthorized accounts and hurting credit scores.
December 27, 2022 at 11:00PM
Fingerhut's website touts that it improves credit scores by offering low-income customers monthly installment payment plans when purchasing everything from towels to electronics and clothing. The company is owned by Eden Prairie-based BLST Operating Co., which acquired the multibrand e-retailer Bluestem Brands Inc. in 2020.
The company did not respond to requests for comment.
Bluestem emerged from Fingerhut after the collapse of the Tom Petters empire in the state's biggest business fraud case in history. Petters orchestrated a $3.65 billion Ponzi scheme and helped buy Fingerhut in 2002, owning 18% of the company at the time of his downfall.
In November, BMO Financial Group was ordered to pay Petters' trustees $563.7 million in damages — the largest financial penalty ever handed out by a Minnesota jury.
Fingerhut was founded in St. Cloud in 1948 and was known for distributing mail-order catalogs to households for decades. The company shifted to the Internet, but customers can still order catalogs online to be delivered in two weeks, or flip through a digital catalog.
The company once had a major presence in Minnesota. On its 50th anniversary in 1998, then-Gov. Arne Carlson declared Fingerhut Day in Minnesota as the company threw a party for its 8,500 employees and families at the Minnesota Zoo.
But in the following years, layoffs dominated headlines. A call center in Duluth was shuttered. The distribution center in St. Cloud closed. Its new Minnetonka headquarters shut down. State lawmakers scrambled trying to use tax dollars to stimulate the private purchase of Fingerhut in 2002 before Petters and Ted Deikel invested.
Now this lawsuit filed last week accuses Fingerhut of creating thousands of unauthorized accounts in March 2022. According to the suit:
Plaintiff Brian Gross of Le Sueur, Minn., is "one of the thousands of people adversely affected by Fingerhut's actions." Gross received a credit alert May 15 that a new Fingerhut account was reporting on his credit score. That same day he was alerted that his FICO score dropped by 25 points.
Alarmed because he hadn't used the account in years after opening it in 2011, Gross tried to dispute the account multiple times with the Big Three credit bureaus: Experian, Equifax and Trans Union. He was also concerned because he thought his identity was stolen and someone fraudulently opened a new account in his name. He wrote to the bureaus, in part:
"I did not open a new account with Fingerhut in March 2022. The date opened should be October 17, 2011. ... I don't think that the inaccuracy in my report is an isolated incident. I am therefore requesting that all ... accounts be reinvestigated and corrected."
In response to the dispute, Gross said Fingerhut told him "it was not a choice we could control." Despite this, Fingerhut has not closed Gross' account and it didn't reinvestigate or correct its reporting.
His attorneys at Minneapolis law firm Berger Montague say that Gross is not alone.
The firm claims that "there are many people complaining that their credit scores dropped because of" Fingerhut's actions, including one unnamed customer who said their score dropped by 45 points while in the middle of applying for a mortgage.
Fingerhut sent an advisory to customers in March informing them that due to a change with its financing partner, Fingerhut customers could no longer use their old Fingerhut Advantage accounts and would have to transition to the new Fingerhut Fetti accounts. Fingerhut said accounts "were automatically created for customers in good standing as a business formality."
Fingerhut also told customers that opening a new account would help their credit scores. But Berger Montague says this statement is false and misleading.
The lawsuit accuses Fingerhut of violating the Fair Credit Reporting Act by opening new unauthorized credit accounts in spring 2022 and falsely representing that customers had closed older credit accounts at that time.
It also accuses the company of violating three state laws: Consumer Fraud, the Uniform Deceptive Trade Practices Act and the False Statement in Advertising Act.
Relief requested in the lawsuit includes awarding all available damages and prohibiting Fingerhut from further false reporting and to correct past false reporting.
Berger Montague did not respond to multiple requests for comment.
The U.S. Department of Labor found the Argentine pizza and empanada restaurant committed several violations across its four locations, including depriving workers of overtime pay and tips, illegally firing an employee and allowing a 15-year-old to work beyond permitted hours.
