A District Court judge in North Carolina has granted a debt buyer’s motion to dismiss claims it violated the Fair Credit Reporting Act by not providing an original signed contract, and chain of title or forward flow agreement.
The background: The plaintiff, proceeding pro se, filed suit alleging violations of both the FCRA and the Fair Debt Collection Practices Act after a debt buyer reported a $687 account tied to a fintech-originated loan on her credit report.
- The plaintiff allegedly disputed the account multiple times, including through a CFPB complaint, and argued that the defendant failed to validate the debt. Specifically, she claimed the defendant did not provide an original signed contract, chain of title, or forward flow agreement linking the debt to her.
- The plaintiff brought several FCRA claims, including allegations that the defendant failed to provide required disclosures, failed to explain its method of verification, and reported inaccurate information. She also asserted FDCPA claims based on alleged failure to validate the debt and continued reporting.
The ruling: Judge Terrence W. Boyle of the District Court for the Eastern District of North Carolina dismissed the case in its entirety, focusing heavily on the mismatch between the statutes cited and the role of the defendant.
- First, he emphasized that several of the FCRA provisions cited by the plaintiff apply only to credit reporting agencies, not furnishers like the defendant. Because the plaintiff identified the defendant as a debt buyer and furnisher, those claims failed as a matter of law.
- The judge also rejected the plaintiff’s reliance on Section 623(a)(1)(A) of the FCRA, noting that there is no private right of action under this provision, a critical distinction that continues to drive dismissals in similar cases.
- On the FDCPA claims, Judge Boyle found multiple deficiencies. The plaintiff failed to plausibly allege the existence of a qualifying consumer debt or that the defendant met the statutory definition of a debt collector. The judge pointedly noted that being a debt buyer alone does not automatically make an entity a debt collector, citing established precedent.
- Perhaps most notably for industry participants, the judge addressed the documentation argument head-on. Citing Fourth Circuit precedent, he reiterated that “verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed.”
