A District Court judge in Alabama has denied a defendant’s motion for summary judgment in a Fair Credit Reporting Act and Fair Debt Collection Practices Act case, ruling the defendant did not do enough to determine whether the debt in question was validly due and owing after the plaintiff filed a dispute.
The Background: Back in 2018, the plaintiff opened an account with AT&T but then learned the services she sought were not available to her. Even though she didn’t receive the services, she was billed for them. When she received the bills, the plaintiff contacted AT&T to remind them she did not owe them for services she did not receive. The first three times the plaintiff called, representatives apologized and indicated that the bills were sent to her in error.
- The fourth time, though, the representative told her that there was a balance on her account and if she did not pay, the account would be turned over to a collection company. The plaintiff did not make a payment and the account was placed with the defendant.
- Under the terms of the contract between AT&T and the defendant, AT&T is required to refer debts that are “validly due and owing.”
- The plaintiff spoke with a representative of the defendant on two occasions, and each time, she disputed the debt. The defendant updated its records to reflect the dispute and communicated the update to the credit reporting agencies. Because the dispute was verbal, the defendant did not seek a response from AT&T. Instead, based on the fact that AT&T was only supposed to send accounts that were “validly due and owing,” the defendant assumed the plaintiff owed the debt.
- The plaintiff also disputed the debt with the credit reporting agencies, which notified the defendant. The defendant’s policy in these situations is to notify the creditor about the dispute and see if the creditor updates the file with a balance adjustment or payment information. In this case, when AT&T did not recall the debt, the defendant verified the information with the credit reporting agency.
The Ruling: The defendant sought summary judgment because the AT&T representatives gave the plaintiff mixed messages regarding the status of her debt, which indicates it was not objectively verifiable. But Judge Annemarie Carney Axon of the District Court for the Northern District of Alabama didn’t see it the same way.
- “The court is mindful that ICS is not the original creditor for Ms. Dorsey’s debt,” the judge wrote. “Perhaps the question would be closer if [the defendant] had contacted AT&T to investigate [the plaintiff’s] dispute. But here, [the defendant] relied exclusively on AT&T’s contractual obligation to refer debts that were ‘validly due and owing’ and took no further steps. Although [the defendant] ‘isn’t the FBI’, [the defendant] is both ‘qualified and obligated to assess issues such as whether debts are actually due and/or are collectible’ when the question is straightforward.”
