A District Court judge in North Carolina has certified a class of more than 800,000 consumers and refused to dismiss a Fair Credit Reporting Act lawsuit accusing a credit reporting agency of selling consumer reports to a debt collector that was allegedly running a collection scam.
The background: The plaintiff sued after she received a letter demanding payment on a debt she said she did not owe, then learned the defendant had sold a copy of her credit report to the company behind that letter.
- The defendant is a credit reporting agency. In 2014 it approved a debt collector as a subscriber after a credentialing process that included an on-site office inspection, and it renewed that access in 2019.
- The debt collector turned out to be part of a fraudulent operation. Federal Trade Commission filings alleged the operators sent consumers letters falsely claiming they owed money, posed as law firms, and threatened imminent lawsuits and credit damage unless consumers paid.
- A court-appointed receiver in the FTC matter described the debt collector’s office as “tiny, with no equipment, no files, and no personnel,” and reported that one operator admitted renting the space “only to satisfy [the defendant’s] physical office requirement.”
- Between 2020 and 2025, the defendant sold the operation more than 800,000 consumer reports. The plaintiff’s report was pulled in August 2022, shortly before she received the collection letter. She claims the defendant lacked a permissible purpose to furnish her report and failed to maintain reasonable procedures limiting who could buy reports.
The ruling: Judge Matthew E. Orso of the District Court for the Western District of North Carolina issued two orders, one certifying the class and one denying the defendant’s effort to end the case before trial.
- On certification, the judge found the class could be identified from the defendant’s own records and was tied together by common questions, chiefly whether the defendant had “reason to believe” the buyer had a lawful purpose.
- The defendant argued the class was too broad because some reports might have been bought legitimately, but the judge pointed to the receiver’s finding that the operation was “incapable of operating a compliant debt collection operation” and said the plaintiff “need not disprove every hypothetical.”
- On summary judgment, the judge framed the dispute around one question: whether the defendant had “reason to believe” the buyer would use the report properly when it handed the report over.
- The plaintiff argued the defendant confused having a “reason to believe” with having “no reason to disbelieve,” citing red flags the credentialing process surfaced. The judge declined to hold that a buyer’s certification alone settles the issue and found a reasonable jury could come out either way.
Read the certification ruling. Read the summary judgment ruling
