District Court (D.C.) Says Debt Collector’s Failure to Report Account as “Disputed” Could Violate Multiple Provisions of the FDCPA

In Hall v. Southwest Credit Sys., L.P., 2019 U.S. Dist. LEXIS 73350, *5-11 (D.C. Dist. May 1, 2019), Judge Howell found that a debt collector’s failure to report to the consumer reporting agencies that the account was “disputed” could violate multiple provisions of the FDCPA.

This case concerns one allegation: The defendant reported a debt to credit bureaus that the defendant should have known was disputed without communicating that the debt was disputed. . . .The defendant’s motion for summary judgment concentrates on only the third prong, asserting that the undisputed facts establish that the defendant has not contravened any of the FDCPA‘s protections. The heart of the parties’ disagreement focuses on the plaintiff’s claim under section 1692e(8), which specifies that “[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” is a “false, deceptive, or misleading representation.” 15 U.S.C. § 1692e(8). Thus, if a debt collector knows that a debt is disputed and elects to report that debt to a credit reporting agency without noting the dispute, that debt collector has violated the FDCPA. Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 346 (7th Cir. 2018); Wilhelm v. Credico, Inc., 519 F. 3d 416, 418 (8th Cir. 2008). The statute’s text makes the same true of a debt collector that should have known a debt is disputed but reports the debt to a credit bureau without also informing the bureau of the dispute. “This ‘knows or should know’ standard . . . depends solely on the debt collector’s knowledge that a debt is disputed, regardless of how or when that knowledge is acquired.” Brady v. Credit Recovery Co., 160 F.3d 64, 67 (1st Cir. 1998).   The defendant insists summary judgment is appropriate  here because the undisputed facts do not support that the defendant had reason to know that the Comcast debt it reported to credit bureaus in October, November, and December 2016 was disputed. Def.’s Mot. at 4-5. Although the defendant received the Dispute Letter, the defendant did not identify any account that matched the name, street address, city, state, and zip code referenced in the Dispute Letter. Id. at 4. . . .Although, as the defendant underscores, see Def.’s Mot. at 3, section 1692e(8) addresses the exact circumstances at play, the plaintiff alleges that the defendant’s failure to report her debt as disputed violates four additional FDCPA provisions. Compl. ¶ 26. The defendant argues that, even conceding that it had reason to know that the debt was disputed, nothing in the record supports a violation of any of the other four provisions. Def.’s Mot. at 7-9. For two of the four—section 1692e(5) and section 1692f—the plaintiff raises no objection to the defendant’s motion. Thus, the plaintiff concedes the defendant’s argument as to the portion of the plaintiff’s claim predicated on these two provisions. See Hopkins v. Women’s Div., Gen. Bd. of Glob. Ministries, 238 F. Supp. 2d 174, 178 (D.D.C. 2002).  The remaining two claims are brought under section 1692e(2) and section 1692e(10), respectively. The first of those paragraphs explains that “[t]he false representation of the character, amount, or legal status of any debt” is an example of a “false, deceptive, or misleading representation.” 15 U.S.C. § 1692e(2). As to this claim, the defendant argues that “the ‘character’ of a debt consists of what a debt is comprised of (i.e. principle, interest, fees, [*10]  etc.) rather than its dispute status.” Def.’s Mot. at 7. If the character of a debt included whether the debt is disputed, Congress, the defendant continues, would not have enacted section 1692e(8). Id. at 7-8. Thus, because the record establishes, at best, a disagreement about whether the debt was disputed, the defendant believes that the plaintiff’s claim under this paragraph is unsustainable.  Certainly, section 1692e(8) specifically addresses the failure to report a debt. Yet, contrary to the defendant’s argument, “the same conduct may support claims brought under multiple subsections [of the FDCPA].” Vangorden v. Second Round, Ltd. P’ship, 897 F.3d 433, 437 (2d Cir. 2018); see also Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1177 (9th Cir. 2006) (“[O]ne action can give rise to multiple violations of the [FDCPA].”). That is the case here. A debt’s character encompasses whether the debt actually is due. See Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 395 (4th Cir. 2013) (upholding judgment in favor of plaintiff for claim under section 1692e(2) concerning false representation that debt had not be satisfied); Ross v. RJM Acquisitions Funding LLC, 480 F.3d 493, 495 (7th Cir. 2007) (explaining that section 1692e(2) applies to efforts to collect any debt already discharged in bankruptcy). Of course, a disputed debt is one for which the obligation to pay is contested. If a debt’s character was as limited as the defendant suggests—referring only to what the debt is comprised of—Congress would not have prohibited in a single [*11]  paragraph both false representations of a debt’s character and a debt’s amount. Therefore, the plaintiff’s claim under section 1692e(2) is viable.  Finally, section 1692e(10), instructs that the FDCPA prohibits “[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.” 15 U.S.C. § 1692e(10). The defendant’s sole argument is that the record does not support that the defendant “reported Plaintiff’s debt in an attempt to collect a debt.” Def.’s Mot. at 8 (emphasis in original). That is wrong. Debts are submitted to credit bureaus to impair the debtor’s credit score so that, in turn, the debtor is induced to pay the debt. For that reason, “the failure to inform a credit reporting agency that the debtor disputed his or her debt will always have influence on the debtor.” Evans, 889 F.3d at 349 (emphasis in original); see also Wilhelm, 519 F.3d at 418 (“[I]f a debt collector elects to communicate ‘credit information’ about a consumer, it must not omit a piece of information that is always material, namely, that the consumer has disputed a particular debt.”). Here, too, the plaintiff may proceed to trial on her claim under section 1692e(10).