A District Court judge has reconsidered his position after a bench trial and has found that a collector did not violate the Fair Credit Reporting Act because the plaintiffs failed to show there was any liability for the company.
Background: The plaintiffs leased a trailer home and a lot for 12 months, with the lease set to expire on April 30, 2020. The plaintiffs allege they notified the property manager in advance that they would be leaving after the 12 months were up and did so. The landlord’s files show a move out date of a month after the lease ended — because nobody was in the office due to the COVID-19 pandemic. The landlord sought to charge the plaintiffs for the additional rent and engaged a collection agency — one of the defendants — to recover the unpaid debt. The agency began reporting the debt to the credit reporting agencies. The plaintiffs disputed the debt with the agency and the credit reporting agencies and provided their evidence that the debt was not owed.
- When they disputed the debt, the plaintiffs did not provide any documentation to show they had moved out prior to the end of their lease. Thus, the defendant determined after conducting its investigation that there was nothing to prove the plaintiffs moved out when they said they did.
- Having previously ruled on some of the claims, the case then proceeded to trial, which took place last December.
- After the three-day trial, Judge Lee Rosenthal of the District Court for the Southern District of Texas ruled the defendant was not liable to the plaintiffs on the remaining Fair Debt Collection Practices Act claims.
- Prior to the bench trial, Judge Rosenthal did grant judgment for the plaintiffs under Section 1681s of the Fair Credit Reporting Act, ruling the defendant did not independently investigate the dispute. During the trial, the defendant urged the judge to reconsider that position and reconsider it he did.
The Ruling: Because they did not provide anything to show they had moved out — like a receipt for a moving truck, for example — the defendant was not obligated to conduct an investigation under the FCRA, Judge Rosenthal ruled.
