District Court (Fla.) Finds Plaintiff Pleaded a FCRA Claim against Check Services Company for Not Reporting Account as Disputed; But Found No FDCPA Claim Because Credit Reporting, By Itself, Is Not Debt Collection

In Calhoun v. Certegy Check Services, Inc., 2014 WL 4146886 (M.D.Fla. 2014), Judge Whittemore found that a Plaintiff stated a FCRA claim against a check services company for failing to report an account as ‘disputed’ during its reinvestigation.

Plaintiff brought this action alleging violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Florida Consumer Collections Practices Act (“FCCPA”), Fla. Stat. § 559.55 et seq., stemming from a disputed debt with the original creditor, Go Daddy, in the amount of $4.00 (Dkt.4). Plaintiff allegedly incurred this obligation for hosting fees for a personal website. Id. at ¶¶ 11–12. In October of 2010, Go Daddy transferred, sold or assigned the debt to Defendant. Id. at ¶ 13. ¶ On January of 2011, Defendant reported the debt to the consumer credit reporting agency (“CRA”) Equifax as an unpaid charge off listing the original amount and balance amount as $4.00, but the past due amount as $29.00, and the type of account as “RETURNED CHECK.” Id. at ¶ 14. Plaintiff alleges she never made a payment to Go Daddy by check, and asserts that “all purchases from Go Daddy were made by credit or debit card.” Id. at ¶¶ 16, 31.

Judge Whittemore found that the Plaintiff’s Complaint adequately pleaded a FCRA claim.

Plaintiff alleges that she disputed the debt to a CRA, who in turn, notified Defendant and requested that it undertake an investigation pursuant to the FCRA (Dkt. 4 ¶¶ 18–19, 21–22, 24–25, 28). Plaintiff alleges that while Defendant responded to the CRA and reported back the results of its investigations on the four occasions that she disputed the debt (Id. at ¶¶ 20, 23, 26, 29), Defendant did not conduct a reasonable investigation and the results of Defendant’s investigations were inconsistent (Id. at ¶¶ 27, 36–38). Plaintiff expressly alleges that the investigation was unreasonable because Defendant failed to uncover that the alleged debt did not stem from a returned check. (Id. at ¶ 36.a). Plaintiff also notes that Defendant’s reports to the CRA were misleading, inaccurate and/or incomplete because they failed to list the alleged debt as disputed. (Id. at ¶ 36.b). ¶ Taking her allegations as true, Plaintiff has plead a cause of action under § 1681 s–2(b) of the FCRA based on an unreasonable investigation, that the debt did not arise from a returned check as reported by Defendant, and that Defendant did not report the debt as “disputed.” See Chiang v. Verizon New England Inc., 595 F.3d 26, 37 (1st Cir.2010) (“reasonableness of the investigation is to be determined by an objective standard” with plaintiff carrying the burden). Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 146–48 (4th Cir.2008) (furnisher may be held liable under § 1681s–2(b) for failure to report information as disputed when the omission is “misleading in such a way and to such an extent” where it could be expected to have an adverse effect such as resulting “in a much lower credit score” for the consumer); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1162–64 (9th Cir.2009) (same following Saunders ). Defendant’s motion to dismiss the FCRA claim is accordingly denied.

The District Court found that credit reporting, by itself however, was not “debt collection” under the FDCPA – even if it indirectly resulted in debt collection.

To allege a FDCPA claim, Plaintiff must plead that: (1) she was the object of collection activity arising from consumer debt; (2) Defendant is a debt collector as defined by the FDCPA; and (3) Defendant has engaged in an act or omission prohibited by the FDCPA. McCorriston v. L.W.T., Inc., 536 F.Supp.2d 1268, 1273 (M.D.Fla.2008). The statute does not define “collection activity.” While discussing the FDCPA, the Supreme Court has defined debt collection as “to obtain payment or liquidation of [debt], either by personal solicitation or legal proceedings.” Heintz v. Jenkins, 514 U.S. 291, 294, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995); see also LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193 n. 15 (11th Cir.2010) (quoting Heintz ). The term “debt collector” is defined by the FDCPA as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6) (emphasis added). ¶ Plaintiff does not allege that Defendant attempted to obtain payment or liquidation of a debt by personal solicitation or legal proceeding. Plaintiff alleges only that Defendant reported the debt to a CRA. Even if this constituted an indirect collection activity as Plaintiff alleges, it is insufficient to meet the requirement that Defendant be a debt collector regularly engaging in debt collection activity as required by the FDCPA. Accordingly, Plaintiff’s FDCPA claim is dismissed without prejudice.