In Quale v. Unifund CCR Partners, — F.Supp.2d —-, 2010 WL 338044 (S.D.Ala. 2010), Judge Granade addressed whether a debtor stated a claim under the FDCPA for the debt collector undertaking collection activities without validating the debt. The debtor pleaded that he requested validation, but the debt collector did not provide same. Although the debt collector undertook no further ‘collection activities’, the debt collector did report adverse information to the Credit Reporting Agencies after the validation demand and without providing validation first. Judge Granade held that the debtor stated a claim under the FDCPA, explaining:
Judge Granade
Contrary to Defendant’s assertion, however, Plaintiff does allege that, after receiving his request for validation, Defendant failed to validate the debt and, instead, reported it to Experian and Innovis without notifying the agencies that the debt was disputed.FN4 (Doc. 1 at 2-3). Whether such conduct constitutes a “collection” activity in violation of § 1692g(b) of the FDCPA has not been addressed in this circuit. However, some courts have indicated that it may constitute a collection tactic prohibited by § 1692g(b). FN4. Plaintiff alleges in Count One of the Complaint that Unifund “entered derogatory information into the Plaintiff’s Experian and Innovis Credit Reports.” (Doc. 1 at 2). Because Plaintiff is proceeding pro se, the Court liberally construes Plaintiff’s allegation that Defendant “entered derogatory information” to include the fact alleged elsewhere in the Complaint that, when Defendant reported the debt, it did not notify the credit reporting agencies that the debt was disputed. ( Id. at 3). ¶ For example, in Purnell, 303 Fed. Appx. at 304 n. 5, the Sixth Circuit recognized that the reporting of a disputed debt to a credit bureau without verification of the debt may constitute “collection activity” in violation of § 1692g. The court relied on an FTC Staff Opinion Letter, 1997 WL 33791232, Dec. 23, 1997, which states:
I. “Is it permissible under the FDCPA for a debt collector to report, or continue to report, a consumer’s charged-off debt to a consumer reporting agency after the debt collector has received, but not responded to, a consumer’s written dispute during the 30-day validation period detailed in § 1692g?” As you know, Section 1692g(b) requires the debt collector to cease collection of the debt at issue if a written dispute is received within the 30-day validation period until verification is obtained. Because we believe that reporting a charged-off debt to a consumer reporting agency, particularly at this stage of the collection process, constitutes “collection activity” on the part of the collector, our answer to your question is No. Although the FDCPA is unclear on this point, we believe the reality is that debt collectors use the reporting mechanism as a tool to persuade consumers to pay, just like dunning letters and telephone calls. Of course, if a dispute is received after a debt has been reported to a consumer reporting agency, the debt collector is obligated by Section 1692e(8) to inform the consumer reporting agency of the dispute.
Id., 1997 WL 33791232, at *1.FN5 FN5. Similarly, in Sullivan v. Equifax, Inc., 2002 WL 799856, *4-5 (E.D.Pa.2002) (unpublished), the court noted that “reporting a debt to a credit reporting agency is ‘a powerful tool designed, in part, to wrench compliance with payment terms….’ “ Id. (quoting Robert J. Hobbs, Fair Debt Collection, § 5.5.10, p. 170-71 (3d ed.1996)). ¶ The district court in Purnell granted summary judgment on Plaintiff’s § 1692g(b) claim on the basis that it was time-barred, but the Sixth Circuit disagreed and reversed. The Sixth Circuit “assume[d] without deciding” that the debt collector’s reporting of the debt to the credit reporting agency after receiving, but not responding to, a request for verification constituted “collection activity.” FN6 Purnell, 303 Fed. Appx. at 304 n. 5. The court remanded the case to the district court for further proceedings. Id. [FN6. The debt collector in Purnell similarly failed to report that the debt was disputed. Id., 303 Fed. Appx. at 299]. ¶ In another case, Campbell v. Credit Bureau Sys., Inc., 2009 WL 2922852 (E.D.Ky.2009), the court likewise recognized that the “reporting of a debt to a credit bureau may constitute a ‘collection activity’ under the FDCPA in the Sixth Circuit.” Id. at *9. However, in Campbell, the plaintiff had not timely requested verification of his debt; therefore, the court held: “even if reporting can violate the FDCPA, no violation took place here.” Id. (“reporting to a consumer reporting agency after receipt of, but before response to, a timely dispute under § 1692g might not be permissible.”) (emphasis in original) (citing Purnell ). See also Semper v. JBC Legal Group, 2005 WL 2172377, *4 (W.D.Wash.2005) (unpublished) (“Until the debt was verified, all further attempts to collect on the debt, including defendants’ September 3rd letter and any subsequent reports to the credit reporting agencies, violated § 1692g(b).”) (emphasis added). ¶ . . . Having considered this issue at length, the Court finds the reasoning of the Sixth Circuit in Purnell persuasive. The Court finds that Plaintiff’s allegations that Defendant, after receiving Plaintiff’s request for verification, failed to verify the debt and, instead, reported it to Experian and Innovis without notifying the agencies that the debt was disputed, are sufficient, at this stage of the proceedings, to state a claim under § 1692g(b) of the FDCPA.