The Fifth Circuit Court of Appeals has upheld a summary judgment ruling in favor of a plaintiff who sued a collection agency because it failed to mark a debt as disputed with the credit bureaus.
The case is Sayles v. Advanced Recovery Systems, Inc. (16-60640). A copy of the ruling can be accessed here.
The defendant sent two collection letters in 2013 to the plaintiff seeking payment for unpaid medical debts. The plaintiff said he never received the letters and learned of the debt when he checked his credit report in February 2014. The plaintiff faxed a letter to the agency disputing the debts and then checked his credit report a month later. The debt had been updated but was not marked as disputed. The plaintiff then sued the defendant, alleging the agency had violated Section 807(8) of the Fair Debt Collection Practices Act: Communicating 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.
A District Court ruled in favor of the plaintiff.
Advanced Recovery Systems appealed the ruling, saying it did not have to comply with Section 807(8) of the FDCPA because the plaintiff did not comply with Section 809 of the FDCPA, which sets forth the manner in which a debt should be disputed.
ACA International, which filed an amicus brief in the case, provided some additional context to the case. The letter the was faxed to the collection agency by the defendant was unsigned and did not provide any reason for the dispute.
The defendant also tried to invoke the Spokeo defense, saying that the plaintiff did not suffer an injury-in-fact in this case and should not be allowed to file a suit in federal court. The Spokeo defense refers to a Supreme Court ruling in the case of Spokeo v. Robins which asserts that a plaintiff must suffer a concrete injury in order to be allowed to file suit in a federal court. Since the actions of the defendant exposed the plaintiff to a financial harm that could be caused by an inaccurate credit rating, the Spokeo defense was not valid.
