The Court of Appeals for the Seventh Circuit has upheld a lower court’s summary judgment ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act and Fair Credit Reporting Act by attempting to collect on a debt that was allegedly incurred as a result of identity theft, ruling that the plaintiff should have known that the attempts were being made in error since he did not make the purchases in question.
A copy of the ruling in the case of Woods v. LVNV Funding and Resurgent Capital Services can be accessed by clicking here.
A credit card was opened in the plaintiff’s name and used to make one purchase — a one-way airline ticket. The debt was never paid and was subsequently sold to the defendants, which attempted to collect on it. The plaintiff responded to the letters by disputing the debt, but never fully provided all the materials that were requested by the defendant to confirm the plaintiff was a victim of identity theft. When the original creditor finally made a determination that the plaintiff was not the individual who made the purchase, the defendant stopped its collection efforts and asked to have the debt removed from the plaintiff’s credit report.
The Seventh Circuit agreed with the lower court that the defendant did not violate Section 1692e(10) of the FDCPA by making false statements about the validity of the debt because when it made those statements, it did not know that the plaintiff’s identity had been stolen.
“The unsophisticated consumer possesses ‘a reasonable knowledge of [his] account’s history,’ and so would have known that, contrary to the assertions in Resurgent’s letters, he had never opened a Citibank account ending in 9762 and bought a flight on American Airlines,” the Appeals Court wrote. “Armed with this knowledge, the unsophisticated consumer would have known the letters were sent in error — just as Woods did here. The fact that American Airlines later confirmed Woods’s intuition that the debt was not his does not render Resurgent’s letters actionable. Instead, because the statements in those letters were not ones that would ‘influence a consumer’s decision … to pay a debt,’ they were not ‘false’ within the meaning of § 1692e(10).”
Turning to the FCRA allegations that the defendant did not conduct a reasonable investigation when the plaintiff disputed his debt, the circumstances of what transpired, coupled with the plaintiff’s responsibilities, led the Seventh Circuit to the conclusion that the defendant’s investigation was not unreasonable. But it did offer a word of caution to other furnishers that this ruling does not offer them a license to “offload their § 1681s-2(b)(1)(A) investigation obligations to consumers by spamming them with requests for additional information.”