Compliance With FCRA’s Requirement To Investigate A Dispute Within 30 Days Does Not Satisfy The FDCPA’s Requirement To Promptly Report A Disputed Debt

In Francisco v. Midland Funding, No. 17 C 6872, 2019 U.S. Dist. LEXIS 20601, at *2 (N.D. Ill. Feb. 8, 2019), the plaintiff sued Midland Funding LLC and Midland Credit Management, Inc. (“MCM”) under the Fair Debt Collection Practices Act (“FDCPA”) for the failure to promptly report the plaintiff’s account as “disputed” to credit bureaus. The FDCPA prohibits debt collectors from “[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.” 15 U.S.C. § 1692e(8) (emphasis added).

MCM services millions of debt accounts and prepares reports of account disputes in bi-weekly batches. The evidence presented by MCM reflected that it had a practice of compiling batches of disputed debts every other Monday and reporting such disputed debts to the credit bureaus every other Friday. Unfortunately for MCM, the plaintiff submitted a dispute letter to MCM on Tuesday, August 22, 2017, but MCM did not report her debt as disputed to the credit bureaus until Friday, September 8, 2017. In the interim, MCM continued to report to the credit bureaus that the plaintiff owed a debt, but did not report that it was disputed.

Citing to 15 U.S.C. § 1681i(a)(1)(A), MCM argued that it complied with the FCRA, which gives credit reporting agencies up to thirty days to investigate disputes, and thus, should not be held liable for an FDCPA violation, having reported the plaintiff’s debt as delinquent within FCRA’s 30 day investigatory period. The US District Court was not persuaded. Citing Seventh Circuit precedent from Evans v. Portfolio Recovery Assocs., 889 F.3d 337, 348 (7th Cir. 2018), the Court held that FCRA does not excuse the obligation to promptly report a disputed debt under the FDCPA stating that “taking time to investigate a dispute [under FCRA] does not give a debt collector license to send a false report while the investigation is underway.”  Thus, the Court found that MCM had violated the FCDPA.

While that finding is troubling, the Court concluded that the plaintiff had not demonstrated actual damages for the three week delay in reporting her debt as disputed. Nonetheless, it concluded that the plaintiff could still recover statutory damages for the FDCPA violation.

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