A District Court judge in New York has granted summary judgment to a defendant in a Fair Debt Collection Practices Act lawsuit, ruling that a company that furnishes tenants’ rental payment data to credit reporting agencies is not a debt collector subject to the statute, even if its actions “may scare tenants into paying on time or indirectly punish tenants for paying late.”
The background: The defendant sells credit reporting services to multi-family residential landlords, passing rental payment information along to a credit reporting agency.
- The defendant is paid a flat monthly fee based on the number of occupied leases reported each month, with no bonus or added compensation tied to whether tenants actually pay their rent.
- The plaintiff vacated her apartment after a rodent infestation, paid that month’s rent, and asked her landlord to apply her security deposit toward the next month; she and the property manager kept disagreeing over how much she still owed.
- The plaintiff later found the defendant was reporting her as 60 days late on a $3,820 balance tied to the broken lease, and she emailed to dispute what she called a fraudulent report.
- The defendant’s dispute team handed her the ledger it had received from the landlord, asked for documentation, and ultimately told her to take the balance up with the management company; those emails were the only contact the two ever had.
- The plaintiff sued, arguing the defendant qualified as a debt collector both because collecting debts was its principal purpose and because it regularly collects them indirectly through negative credit reporting.
The ruling: Judge Brian Cogan of the District Court for the Eastern District of New York granted the defendant’s motion for summary judgment, finding the record showed it was not in the business of collecting debts.
- Before reaching the merits, the judge dispatched the defendant’s lead argument that the complaint failed to state a claim, which he had already rejected at the motion-to-dismiss stage. He called it “outright sanctionable” for counsel to raise something so clearly wrong and easily disproved.
- Judge Cogan noted the defendant has no stake in whether any landlord’s rent gets paid, never demands payment from tenants, and does not even notify them of outstanding balances; it furnishes data and collects the same flat fee regardless of the outcome.
- The judge acknowledged a reasonable juror could find the defendant lands business only because tenants sometimes don’t pay, and that negative reporting indirectly pressures them. But scaring tenants into paying on time, he wrote, does not by itself turn a furnisher into a debt collector.
- Reading the statute as broadly as the plaintiff urged, the judge warned, would sweep in every furnisher, with “basically all furnishers” becoming debt collectors.
