8th Cir. Says Debt Collector’s Re-investigation of Consumer Debt under FCRA was not a “Communication” that Triggered the FDCPA

In McIvor v. Credit Control Services, Inc., — F.3d —-, 2014 WL 6805380 (8th Cir. 2014), the Court of Appeals for the Eighth Circuit held that a debt collector’s reinvestigation of a credit dispute and communications with the CRAs was not a “communication” in connection with the collection of a debt under FCRA because, instead, it was the debt collector’s compliance with the FCRA’s obligations.

McIvor also appeals the district court determination that the complaint insufficiently alleged that Credit Control’s communication with TransUnion was “in connection with the collection of any debt.” This circuit has not yet considered a case that required us to define the phrase “in connection with the collection of any debt .” Other circuits have determined that this phrase is intended to encompass more than simply a debt collector’s demands for payment made to the consumer. Simon v. FIA Card Servs., N.A., 732 F.3d 259, 266 (3d Cir.2013); Grden v. Leikin Ingber & Winters PC, 643 F.3d 169, 173 (6th Cir.2011); Gburek v. Litton Loan Servicing, 614 F.3d 380, 382 (7th Cir.2010). We now follow these circuits in concluding that “for a communication to be in connection with the collection of a debt, an animating purpose of the communication must be to induce payment by the debtor.” Grden, 643 F.3d at 173; see Simon, 732 F.3d at 266–67; Gburek, 614 F.3d at 385. ¶ McIvor contends that Credit Control “had no purpose here other than collection.” She argues that Credit Control’s communication to TransUnion was in connection with debt collection because entities like Credit Control use credit reporting as a way to induce consumers to pay their debts. She cites a letter from the Federal Trade Commission which states, “[D]ebt collectors use the reporting mechanism as a tool to persuade consumers to pay, just like dunning letters and telephone calls.” Federal Trade Commission, Staff Opinion Letter, 1997 WL 33791232 at *1 (December 23, 1997). ¶ Certainly, communication between a debt collector and a consumer reporting agency may at times be in connection with debt collection. We have previously noted that § 1692e(8) prohibits a debt collector who has received notice of a dispute from a consumer and who “ elects to communicate ‘credit information’ about a consumer” to a reporting agency from omitting its knowledge of the dispute. Wilhelm v. Credico, Inc., 519 F.3d 416, 418 (8th Cir.2008) (emphasis in original). The Federal Trade Commission letter McIvor cites similarly concludes that a debt collector engages in collection activity when it chooses to report a debt it knows to be disputed. Staff Opinion Letter, 1997 WL 33791232 at *1. McIvor makes a much broader argument, however. She contends that any communication about a debt from a debt collector to a consumer reporting agency is always intended to facilitate collection. We decline to draw such a sweeping conclusion, especially when the allegations in the complaint itself undercut McIvor’s argument. McIvor alleged that the communication between TransUnion and Credit Control, prompted by her dispute report, was “part of [the] reinvestigation required by the Fair Credit Reporting Act” (FCRA). ¶ Congress enacted the FCRA to address a “need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” 15 U.S.C. § 1681(a)(4). It places responsibilities on both consumer reporting agencies and furnishers of information, including debt collectors. E.g. 15 U.S.C. §§ 1681i, 1681s–2. When a consumer disputes a debt directly with a reporting agency, as McIvor did, the agency must within 30 days “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file” if it is “found to be inaccurate, incomplete, or cannot be verified.” § 1681i(a)(1)(A), (5)(A). When a furnisher of information like Credit Control is contacted as part of this reinvestigation process, it is obligated to “conduct an investigation with respect to the disputed information” and report the results to the consumer reporting agency. § 1681s–2(b). Individual consumers may sue for willful or negligent failure to comply with the investigation requirements outlined in these sections, but McIvor did not bring such a claim against Credit Control. §§ 1681n, 1681o. ¶ As supported by these statutory requirements and alleged in the complaint, Credit Control communicated with TransUnion with the purpose of complying with the FCRA, not as an elective report of credit information. The distinction between voluntary and required communication with consumer reporting agencies is significant. In Edeh v. Midland Credit Management, Inc., 748 F.Supp.2d 1030 (D.Minn.2010), aff’d, 413 F. App’x 925 (8th Cir.2011) (per curiam), the district court distinguished between voluntary reporting of debts and FCRA required verification. There, the consumer claimed that the collector, Midland, violated § 1692g of the FDCPA because it did not cease collection activities after he disputed the debt in writing. 748 F.Supp.2d at 1033–34. Midland had reported the debt to a consumer reporting agency and also responded to inquiries from reporting agencies by verifying the debt. Id. The court “distinguish[ed] Midland’s reporting the debt to the CRAs on its own initiative from Midland’s verifying the debt after receiving notification from the CRAs that Edeh had disputed the debt,” granting summary judgment to Edeh on the claim that reporting violated § 1692g and to Midland on the claim that verifying violated § 1692g. Id. at 1035–36 (emphasis in original). The difference between these two actions was that Midland did not have to report the debt, but it was required by the FCRA to verify the debt. Id. ¶ Although Edeh concerned a different section of the FDCPA, the distinction it drew is persuasive. Here, McIvor does not allege that Credit Control failed to communicate that the debt was disputed during a voluntary report to TransUnion. Neither does the complaint allege facts showing any collection related motivation for the communication at issue. The only “animating purpose” for Credit Control’s communication that is plausibly alleged in the complaint is compliance with the reinvestigation procedures required by the FCRA, and actions related to these investigation requirements are brought under the FCRA rather than the FDCPA. ¶ We conclude that McIvor neither plausibly alleged that the communication at issue was “false, deceptive, or misleading” nor that it was “in connection with the collection of any debt.” The complaint therefore fails to state a claim for relief under § 1692e. The judgment of the district court is affirmed.