On January 28, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded a lower court’s decision in a debt dispute under the FDCPA. The plaintiff alleged the defendant, a debt collector, violated the FDCPA by failing to report that his debt had been disputed to credit reporting agencies. The district court granted summary judgment for the debt collector because the plaintiff had stopped disputing the debt. Based on the facts of the case, however, the appellate court found that the plaintiff did indeed dispute the debt, and accordingly, there was in fact a “genuine issue of material fact” about whether the debt collector should have known about the dispute.
If the defendant knew or should have known that the plaintiff’s debt was disputed, it would be a violation of the FDCPA to not report that the debt was disputed at the time the debt was reported to credit reporting agencies. The court emphasized that Section 1692e(8) of the FDCPA, which prohibits communicating credit information that is known or should be known to be false, creates a negligence standard in determining whether a debt collector “should” have known a particular piece of information. The Court further determined 1692e(8) of the FDCPA holds debt collectors to a duty of reasonable care to report accurate information and that, “the harm Congress sought to remedy through Section 1692e(8) is analogous to the harm caused by defamation.” The appellant also discussed that a debt collector who violated the FDCPA can invoke the bona fide error defense only if it claims it made an error of fact, not an error of law. The case was remanded for further proceedings.
