A District Court judge in Illinois has granted motions to dismiss from two collection operations and the original creditor claims that they violated the Fair Debt Collection Practices Act, but denied the creditor’s motion to dismiss a claim it also violated the Fair Credit Reporting Act, questioning the creditor’s strategy to defeat the FCRA claim.
The background: The case stems from efforts to collect a $12,222 credit card debt. Two collection operations, a law firm and a collection agency, each sent letters to the plaintiff in late 2024 attempting to collect the balance. The law firm later filed a state court lawsuit in January 2025.
- The plaintiff, disputing the validity of the debt, also informed the credit reporting agencies that the debt was inaccurate.
- She alleged that the creditor verified the debt to those bureaus but failed to note that the account was disputed, which she claimed damaged her credit score and led to denials of credit opportunities.
The ruling: Judge April M. Perry of the District Court for the Northern District of Illinois dismissed the FDCPA claims against the two collection operations, finding that the plaintiff did not plausibly allege either entity was responsible for reporting information to the credit bureaus. “… the sending of a dunning letter, even an inaccurate one, does not alone constitute a cognizable harm,” Judge Perry wrote, concluding that the alleged credit damage could not be traced to their conduct.
- The court also dismissed the FDCPA claim against the creditor, noting that creditors collecting their own debts are not “debt collectors” under the FDCPA.
- However, the judge declined to dismiss the FCRA claim, holding that the plaintiff had sufficiently alleged that the creditor received notice of her dispute and failed to report the account as disputed. Judge Perry cited other appellate rulings in agreeing that “a failure to report that a debt is disputed could be considered materially misleading within the meaning of Section 1681s-2(b)” of the FCRA.
- The judge added that she “frankly does not understand” the creditor’s argument that there was no inaccuracy in its reporting, pointing out that the complaint alleged the creditor reported a debt “that was not truly owed.” The court said the creditor could revisit that argument at the summary judgment stage.
