A District Court judge in Utah has denied a defendant’s motion to dismiss in a Fair Credit Reporting Act case, ruling that it did not conduct a reasonable investigation after the plaintiff disputed the debt because both the defendant — the original creditor — and a collection agency were reporting the debt to the credit reporting agencies.
A copy of the ruling in the case of Hansen v. Mountain America Federal Credit Union can be accessed by clicking here.
The plaintiff had a delinquent credit card debt with the defendant that was placed with a third-party collection agency. In checking her credit report, the plaintiff noticed that both the defendant and the agency were furnishing information about the debt, albeit with different amounts. The plaintiff wrote to all three credit reporting agencies, noting that the debt was being double-reported. The defendant received a notice about the dispute from two of the credit reporting agencies, investigated the dispute, determined that its reporting was accurate, and declined to make any changes.
The plaintiff filed suit, alleging the defendant violated Section 1682s-2(b) of the FCRA. The defendant filed a motion to dismiss, arguing that its tradeline shows the account as closed and that it had been assigned to a collection agency. But there were aspects of the credit report that could be misleading, ruled Judge Tena Campbell of the District Court for the District of Utah, such a the differing balances on the two tradelines. Ultimately, Judge Campbell said she could not find an “authority that provides clear guidance about how a debt should be reported when it has been assigned,” and denied the motion to dismiss.
