Judge Denies MTD in FDCPA Case Over Not Removing Dispute Notation

A District Court judge in California has denied a defendant’s motion to dismiss, ruling that a plaintiff’s third amended complaint which accused the defendant of failing to notify the credit reporting agencies that he was no longer disputing his debt constitutes a communication “in connection with the collection of any debt.”

Backstory: The plaintiff sent the defendant a letter indicating that he was no longer disputing his accounts and asked the defendant to update their tradelines with the various credit reporting agencies, which allegedly did not happen. The plaintiff filed his first complaint, and the judge granted the defendant’s motion to dismiss, ruling the plaintiff lacked standing to sue. The plaintiff filed a second complaint, which the defendant again got the judge to dismiss, giving the plaintiff “one last opportunity” to amend.

Third Time’s The Charm: In his third complaint, the plaintiff accused the defendant of violating Sections 1692e and 1692e(8) of the FDCPA by willfully communicating credit information which was known or which should have been known to be false. When it saw the dispute flag on the plaintiff’s credit report, a mortgage lender informed the plaintiff he would not be able to obtain a loan until the flag was removed.

What This Means:

The Court of Appeals for the Ninth Circuit has yet to be asked to define what “in connection with the collection of any debt means” but it looks like it may have to sooner rather than later. For the time being, at least, not communicating updated dispute information to a credit reporting agency falls under conduct “in connection with the collection of any debt,” according to Magistrate Judge Sheila K. Oberto of the District Court for the Eastern District of California.