A District Court judge in Kansas has partially granted a plaintiff’s cross-motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that the defendant is liable as a matter of law for reporting a debt to a credit reporting agency without a dispute notation because the dispute letter reached its collection agency.
The background: The plaintiff took out a consumer loan for personal living expenses, defaulted, and the account was purchased by the defendant, which placed it with a collection agency for collection.
- The agency had applied for the business 10 days before signing the collection service agreement, disclosing it had been formed less than 60 days earlier and was still putting insurance coverage and industry memberships in place, according to the ruling.
- The agreement required the agency to immediately pass along any third-party notice concerning the accounts, including attorney representation. The defendant admitted it “had the right of oversight and control over the debt collection activity” the agency performed.
- The agency sent a letter demanding $3,578.28 and telling the plaintiff it “has been authorized by” the defendant to handle the balance.
- In June 2024, lawyers for the plaintiff emailed the agency a letter stating she “questions the correctness of the debt(s).” The next month, the defendant reported the debt to a credit reporting agency with no indication it was disputed.
- After reviewing her credit report, the plaintiff had counsel mail a second dispute directly to the defendant, an effort she said cost her about $260. She then sued under Sections 1692e(8) and 1692f of the FDCPA, and both sides moved for summary judgment.
The ruling: Judge Anthony W. Mattivi of the District Court for the District of Kansas denied the defendant’s motion and granted the plaintiff’s in part, finding standing established by both her out-of-pocket response and the publication of a derogatory, incomplete tradeline to a third party, a harm closely paralleling defamation.
- The judge brushed aside the argument that under two months of misreporting caused too little harm to matter, noting that an argument the defendant harmed the plaintiff only once is not an argument that she was not harmed.
- The defendant’s reliance on Henson failed because that decision addressed only the “owed another” prong. Here the plaintiff proceeded under the principal purpose prong, which the defendant’s briefing never engaged. More than 95% of the defendant’s revenue came from buying and liquidating defaulted consumer debt, roughly 70 of its 80 employees held the job role of debt collector, and it had signed a Tennessee consent order admitting it collected there without a license.
- The claim that the agency never forwarded the letter did not help. Under agency principles, the agency’s knowledge was the defendant’s, and a principal “may not rebut the imputation of an agent’s notice of a fact by establishing that the agent kept silent.”
- The theory that the agency was temporarily out of business collapsed on the defendant’s own records. The agency’s account notes showed an entry marking the account “Open for work!” nine days before the dispute email arrived, and it kept collecting through the summer.
- The bona fide error defense failed for want of proof. The defendant’s only evidence was a declaration describing no procedure at all, and while its brief named two credit reporting policies, neither was filed. As Judge Mattivi put it, “Assertions in a brief are not evidence.”
- Both motions were denied without prejudice on the Section 1692f count as duplicative, and the defendant’s request for leave to seek attorney’s fees was denied. The case proceeds to a jury trial on damages.
