Consumer Finance Litigation

A recent federal court decision, Rogers v. Virtuoso Sourcing Group, LLC, 2013 WL 772865, 12-CV-01511 (S. D. Ind. Feb. 28, 2013) sheds new light on whether the Fair Debt Collection Practices Act ("FDCPA") requires a debt collector to affirmatively undertake to update its credit reporting to reflect a dispute by the consumer concerning the validity of the debt. The District Court for the Southern District of Indiana held that the FDCPA, specifically those provisions found at 15 U.S.C 1692e(8), contains no such affirmative requirement when the dispute is tendered to the debt collector after the debt collector has made its credit reporting. Any future credit reporting, however, would still need to reflect the dispute of debt. As a practical matter, this makes the "last updated" line on a trade line highly relevant information in any suit under the FDCPA alleging a violation of Section 1692e(8). Applying the Rogers decision, if the "last updated" date precedes the date of the dispute letter, there is no actionable violation of the FDCPA. The facts reviewed by the Court were that several months after the Defendant reported the debt to the consumer reporting agency, -Plaintiff's counsel sent a letter to the Defendant indicating that the Plaintiff disputed the debt. Several months after the letter, the Plaintiff obtained a copy of his credit report which still reflected the debt and did not indicate that it was "disputed." Notably however, the credit report indicated that the debt was "last reported" prior to the letter, i.e. it had not been updated since the Defendant received Plaintiff's dispute letter. The Plaintiff sued the Defendant on the theory that the Defendant had an obligation, under the FDCPA, to update its credit reporting to reflect the dispute. The District Court "rejected" the Plaintiff's theory that the FDCPA "imposed an affirmative duty on [debt collectors] to disclose that plaintiff had disputed the debt." (internal use of brackets omitted). The District Court held instead that "the relevance of the portion of § 1692e(8) on which [plaintiff] relies-'including the failure to communicate that a disputed debt is disputed'-is rooted in the basic fraud law principle 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, namely, that the consumer has disputed a particular debt." Rogers, 2013 WL 772865, at 2 (emphasis in original). Thus, only when the dispute preceded the credit reporting, and the credit reporting omits a notation that the debt is disputed, will an action lie under the FDCPA. The District Court was influenced in part on a 1988 FTC commentary which stated: 1. Disputed debt. If a debt collector knows that a debt is disputed by the consumer ... and reports it to a credit bureau, he must report it as disputed. 2. Post-report dispute. When a debt collector learns of a dispute after reporting the debt to a credit bureau, the dispute need not also be reported. Id. (quoting FTC Staff Commentary, 53 Fed.Reg. 50097-02, 50106 (Dec. 13, 1988)) (emphasis in the original). While the District Court acknowledged that the interpretation of the FTC Staff Commentary was non-binding, the District Court noted that the law required that the Court afford the interpretation of the FTC "respectful consideration." Id. The District Court also noted that the great weight of the case law, including a landmark opinion from the Eight Circuit Court of Appeals, Wilhelm v. Credico, Inc., 519 F.3d 416 (8th Cir.2008), also did not support the Plaintiff's position that the FDCPA creates an affirmative duty to update credit reporting to reflect a dispute of debt. The Rogers opinion reinforces the growing line of cases to hold that the FDCPA does not create an affirmative duty to update credit reporting to reflect a consumer's dispute concerning the validity of a debt, unless the debt collector elects to undertake to report information about the account after the dispute has been communicated to the debt collector. It should be noted that the Rogers opinion did not address whether the Fair Credit Reporting Act ("FCRA") would create such an obligation on a debt collector who qualified as a "furnisher of information" to update credit reporting to reflect a dispute of the debt, assuming the dispute flowed through the appropriate channels under the FCRA. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.