Court Finds FDCPA Does Not Require Updating Credit Report With Dispute

September 6, 2013 in Credit Reporting, FDCPA, Indiana Courts by Brad Council

The Fair Debt Collections Practices Act requires that when a debt collector reports a debt to a consumer reporting agency, they must also report whether the debt is disputed. This requirement leaves open the question of what happens if a debt becomes disputed after the debt collector has already reported it. Does the collector have an obligation to update the reporting agency’s information?  In February of 2013, the District Court in the Southern District of Indiana in the case of Joshua Rogers v. Virtuoso Sourcing Group, LLC, decided that they did not, holding that once a debt collector has reported that the consumer owes the debt, they do not have a continuing, affirmative obligation to report if it becomes disputed at a later date.

In January 2012, Virtuoso reported to a consumer reporting agency that the plaintiff, Joshua Rogers, had defaulted on a debt. Four months later, Virtuoso received notice that Rogers was disputing the debt. When Rogers checked his credit report several months later, it still reflected the debt, but not that it was disputed.  Rogers brought an action against Virtuoso for violations of the FDCPA. He argued that the language of section 1692e(8), which states that it is a violation of the FDCPA to “communicate or threaten 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” supported a finding that Virtuoso had an affirmative duty to update the credit reporting agency’s information once they knew the debt was disputed.

The District Court disagreed. Relying on an 8th Circuit Court of Appeals decision and a 1988 Federal Trade Commission Staff Commentary, the Court stated that, “if a debt collector elects to communicate ‘credit information’ about a consumer, it must not omit a piece of information that is always material – whether the debt was disputed.” In addition, the Court emphasized language from the 1988 Staff Commentary: “When a debt collector learns of a dispute after reporting the debt to a credit bureau, the dispute need not also be reported.” When combined, this language clearly states that unless a debt collection agency chooses to report again after a debt becomes disputed, it is under no obligation to update a credit reporting agency’s information.

The Court also wasted little time responding to Rogers’ reliance on a 1997 FTC Staff Letter: “[it] is ambiguous at best…[and] does not stand for the proposition that the debt collector has an obligation to report the debt after the dispute.” This finding in spite of explicit language in the Letter which states that “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.” The Court qualified this by stating that it only applies if a debt collector chooses to continue to report; it did not require them to report multiple times.

Finding such, the Court held that the plaintiff’s claim failed as a matter of law and granted defendant’s motion to dismiss.

The Full Text of the Opinion May Be Found At: http://scholar.google.com/scholar_case?case=155166204411155402&hl=en&as_sdt=2&as_vis=1&oi=scholarr

Special thanks to Meredith Hughes for her contributions to this article.  Meredith is a Litigation Clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.