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DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
A collection operation and a credit reporting agency are facing claims of violating the Fair Credit Reporting Act, with the collector also facing Fair Debt Collection Practices Act claims, after a pay-for delete arrangement was rescinded because the payment was allegedly refunded, resulting in the plaintiff’s credit score dropping and two credit applications being denied.
The background: Last October, the plaintiff received a written settlement offer from the collector on a medical debt with a balance of $1,067. The offer proposed accepting $500 as full satisfaction of the debt and stated that once the payment was made, the account would be submitted for deletion from all three credit reporting agencies.
- The plaintiff made the $500 payment a few days later, and the account was removed from his credit reports, according to the complaint.
- In April 2026, the plaintiff discovered the account had been reinserted into his credit report. His credit score allegedly dropped from around 750 to around 590 following the reinsertion.
- When the plaintiff called the collector to ask why, a representative allegedly told him the settlement payment had been refunded, and that the refund was the reason the account was being reported again. There is a wrinkle with that explanation, according to the complaint. The representative said the payment was refunded on October 1, 2025, but the plaintiff did not make the payment until October 6, 2025. The plaintiff reviewed his bank statements and found no record of any refund from the collector, according to the complaint.
- The plaintiff submitted a written dispute to the credit reporting agency A few weeks later, the credit reporting agency notified the plaintiff that it had verified the disputed information as accurate, allegedly after the collector verified the debt in response to the dispute.
- While the account was being reported, the plaintiff applied for a home equity line of credit to finance repairs to his home and, separately, for a credit card. Both applications were denied, with the card issuer citing his credit score, according to the complaint.
The claims: The complaint accuses the credit reporting agency of violating Section 1681e(b) of the FCRA by failing to follow reasonable procedures to assure maximum possible accuracy of the information in the plaintiff’s credit report, and Section 1681i by failing to conduct a reasonable reinvestigation of the plaintiff’s dispute.
- The complaint accuses the collector of violating Section 1681s-2(b) of the FCRA by failing to reasonably investigate the dispute after receiving notice of it from the credit reporting agency, failing to review all relevant information, and failing to correct or cease furnishing the disputed information.
- The complaint also accuses the collector of violating Sections 1692e(2), 1692e(8), and 1692e(10) of the FDCPA by misrepresenting the character, amount, and legal status of a debt that had been paid, settled, and closed, and communicating credit information it knew or should have known was false, and Section 1692f(1) by attempting to collect an amount not authorized by the agreement or permitted by law.
