Being denied credit because of a negative item on a credit report is sufficient grounds for a plaintiff to have standing to sue, ruled a District Court judge in New York, but communicating information about an unpaid debt with the credit reporting agencies is not a violation of the Fair Debt Collection Practices Act, so he granted the defendant’s motion to dismiss the case.
The Background: The defendant purchased an unpaid credit card debt and sent the plaintiff a letter in August 2021. The letter did not indicate that the defendant would be furnishing information about the debt to the credit reporting agencies. The plaintiff, through a friend, sent a letter to the defendant asking for it to stop all communication and noting that the plaintiff was refusing to pay the debt. The defendant responded to the letter with documentation that substantiated the debt. In 2022, the plaintiff was denied for two credit cards because of collection entries on her credit report.
The Claim: The plaintiff filed suit, alleging the defendant violated numerous sections of the FDCPA by communicating information about her debt with the three major credit reporting agencies after the plaintiff sent her notice to stop communicating about the debt.
The Ruling: After first ruling that the plaintiff had standing to sue based on the denial of credit, Judge Kiyo A. Matsumoto of the District Court for the Eastern District of New York then turned to the merits of the plaintiff’s arguments.
- Judge Matsumoto goes into detail on each of the sections of the FDCPA that the plaintiff claims the defendant allegedly violated, but reaches the same conclusion — there is nothing in the FDCPA that prohibits collectors from reporting information about a debt to a credit reporting agency after a consumer has requested that all communications be ceased.
- “The language of the statute, however, expressly permits communications with ‘a consumer reporting agency if otherwise permitted by law,’ ” Judge Matsuomoto wrote.
