Judge Grants MSJ for Defendant in FDCPA Case Over Allegedly Fraudulent Loan

Claiming you have been the victim of identity theft is not enough to get a collection item removed from your credit report, a District Court judge in California has ruled, granting a defendant’s motion for summary judgment after the plaintiff claimed it violated the Fair Debt Collection Practices Act by continuing to report the debt to a credit reporting agency after being notified of the alleged fraud.

A copy of the ruling in the case of Blackmon v. Ad Astra Recovery Services can be accessed by clicking here.

A payday loan was issued to an individual purporting to be Brittany Blackmon. The individual who received the funds never made a payment on the loan and it was assigned to the defendant for collection. The defendant was never able to get in touch with the individual. Four years later, the plaintiff contacted the defendant to verbally dispute the debt. She claimed to have seen the delinquent debt on her credit report and she believed the loan to be fraudulent. The representative from the defendant informed the plaintiff to get the item off her credit report, she needed to submit either a police report or a notarized affidavit and then instructed her on how to submit the documentation. The defendant continued to report the debt, but marked the account as disputed.

Six months later, an attorney representing the plaintiff submitted a formal written dispute of the debt, to which the defendant responded with the required verification.

The plaintiff filed suit, essentially alleging that the defendant violated Sections 1692e and 1692f of the FDCPA by continuing to report the debt after it was notified of the potential fraud. The plaintiff claims she should not be held liable for the debt and that reporting the debt to the credit bureaus is an FDCPA violation.

But, as Judge Cathy Ann Bencivengo of the District Court for the Southern District of California details, nothing that the defendant did in its handling of the situation was wrong.

“None of AARS’s communications undermined Blackmon’s ability to intelligently choose her action concerning the loan account,” Judge Bencivengo wrote. “There was nothing about AARS’s statements that would confuse or mislead even the least sophisticated debtor’s attempt to remove the fraudulent account from their credit report.”

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