Judge Grants MTD in FDCPA Case Over Tradeline Status

A District Court judge in New York has granted a defendant’s motion to dismiss after it was sued for violating the Fair Debt Collection Practices Act because of how it described the status of an unpaid debt when it was reported to one of the credit reporting agencies.

A copy of the ruling in the case of Guzman v. I.C. System can be accessed by clicking here.

The plaintiff obtained a copy of her credit report, which included a tradeline provided by the defendant. The tradeline listed an unpaid cell phone debt and described the status as, “[s]eriously past due date / assigned to attorney, collection agency, or credit grantor’s internal collection department.” She filed suit, alleging the defendant violated Section 1692e(5) of the FDCPA by threatening to take an action that cannot be legally taken or that is not intended to be taken. The status could make a least sophisticated consumer believe that legal action was authorized and imminent, claimed the plaintiff.

But Judge Allyne Ross of the District Court for the Eastern District of New York did not see it the same way as the plaintiff. “At most, the least sophisticated consumer might think an attorney is reviewing the debtor’s account, which does not signal imminent legal action on its own,” she wrote in her ruling. Noting that the status of the tradeline indicated that the account had been assigned to an attorney, collection agency, or credit grantor’s internal collection department, there was nothing to indicate that anything was going to happen, Judge Ross wrote. The credit report “stated that the debtor’s account was in one of three actors’ hands but did not describe any actions those individuals could take or suggest that they have the authority to take any action imminently.”

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