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Financial Services Law Insights and Observations

District Court partially grants a defendant’s MTD in FCRA, FDCPA case

Courts FCRA FDCPA Consumer Finance


On June 29, the U.S. District Court for the Eastern District of Missouri granted in part and denied in part a Wisconsin-based debt collection agency’s (defendant) motion for judgment in an FCRA and FDCPA case where the plaintiff alleged the defendant failed to update the information it was furnishing to credit bureaus after the plaintiff notified a credit bureau that she was no longer disputing the debt. Prior to February 2020, the plaintiff disputed the accuracy of a tradeline by the defendant appearing on her credit report with an unspecified party and then notified a credit reporting agency that she was no longer disputing the debt. The credit reporting agency forwarded the plaintiff’s notice to the defendant. After the plaintiff saw that the tradeline was still reported as disputed on her credit report, she filed suit alleging the defendant violated the FCRA by failing to conduct a proper investigation after being notified that the plaintiff was no longer disputing the debt and the FDCPA for reporting information it had knowledge of being false. The defendant argued “that it cannot be liable under the FCRA based on [the plaintiff’s] allegations because it had no new information to ‘reasonably investigate.’” However, the court denied the defendant’s motion for judgment on the pleadings as to the plaintiff’s FCRA claims stating that, “at this stage of the case, the Court cannot determine whether it would have been reasonable for [the defendant] to rely solely on its own files when performing its investigation after receiving [the plaintiff’s] letter stating that she no longer disputed her tradeline.” With respect to the FDCPA claim, the court cited the 8th Circuit’s ruling in Wilhelm v. Credico, Inc., which held that “whether ‘the consumer has disputed a particular debt’ is ‘always material’ and thus a debt collector must disclose that an account is disputed when it ‘elects to communicate ‘credit information[,]’ the fact that an account is no longer disputed would also be material.” In addition, the court found that the plaintiff failed to state a claim pursuant to the alleged FDCPA violation because she did “not allege any facts demonstrating that [the defendant] continued to report false credit information after it received notice from [a reporting agency] that she no longer disputed her [debt].” However, the court granted the plaintiff leave to file an amended complaint.

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