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Ownership of a debt outside CRA’s “reasonable inquiry”

Steven Uhrich

Link: AMORAH v. EQUIFAX INFORMATION SERVICES, LLC, (N.D. Ill., Nov. 9 2020).

Judge Manish S. Shah joined a growing chorus of recent courts finding that under the 7th Circuit’s Denan case (and others), the question of a loan’s validity is not something a Consumer Reporting Agency needs to investigate once a furnisher verifies in response to an ACDV.

It remains to be seen how far this reasoning will be stretched by CRAs. Some attorneys believe that in such a circumstance the plain language of 15 U.S.C. § 1681i(a) requires deletion because the CRA admittedly can’t verify whether the information is accurate or inaccurate. To put it another way, without a judicial determination settling the interpretation of the reported information, why should a CRA verify information?

To state a claim under these sections, a plaintiff must show that an agency included “inaccurate” information in a report. Denan, 959 F.3d at 293. The statute does not define inaccurate or draw a line between factual and legal inaccuracy. Id. But consumer reporting agencies are not courts, and the ability to resolve legal issues around disputed debts “exceeds the competencies of consumer reporting agencies.” Id. at 295. Only a court “can fully and finally resolve the legal question of a loan’s validity.” Id. Put differently, a plaintiff states an FCRA claim only if she plausibly alleges that a consumer report contained a factual inaccuracy, because consumer reporting agencies “are neither qualified nor obligated to resolve legal issues.” Id. at 296. A consumer’s defense to a debt is a question for courts, not consumer reporting agencies. Id.

The Denan Court did not consider whether a dispute over ownership of a debt was factual or legal. But several district courts applying Denan have concluded that investigating the ownership of a debt “is best left to the courts.” Hoyos v. Experian Info. Sols., Inc., 20-cv-408, 2020 WL 4748142, at *3 (N.D. Ill. Aug. 17, 2020); see also Soyinka v. Equifax Info. Servs., LLC, 20-cv-1773, 2020 WL 5530133, at *3 (N.D. Ill. Sept. 15, 2020); Juarez v. Experian Info. Sols., Inc., 19-cv-7705, 2020 WL 5201798, at *4-5 (N.D. Ill. Aug. 31, 2020); Molina v. Experian Info. Sols., Inc., 19-cv-7538, 2020 WL 4748149, at *3 (N.D. Ill. Aug. 17, 2020); Rodas v. Experian Info. Sols., Inc., 19-cv-7706, 2020 WL 4226669, at *2 (N.D. Ill. July 23, 2020); Chuluunbat v. Cavalry Portfolio Servs., LLC, 20-cv-164, 2020 WL 4208106, at *3 (N.D. Ill. July 22, 2010).[2]

Labeling an issue as one of fact, one of law, or a mix of the two is not always simple. See Pullman-Standard v. Swint, 456 U.S. 273, 288 (1982) (noting the “vexing nature of the distinction” between questions of fact and law). Sometimes the distinction turns on a determination that “as a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.” Merck Sharp & Dohme Corp. v. Albrecht, 139 S. Ct. 1668, 1680 (2019) (quoting Markman v. Westview Instruments, Inc. 517 U.S. 370, 388 (1996)). And a question that has “both factual and legal elements” is typically a mixed question. Guerrero-Lasprilla v. Barr, 140 S. Ct. 1062, 1069 (2020).[3]

Here, Amorah insists that Midland did not own the debt. And because ownership is a question of fact, she says, her credit report contained a factual inaccuracy. But labeling debt ownership in the abstract as an issue of fact, a mixed question, or a question of law is beside the point. The operative inquiry under the FCRA is whether ownership of the debt was plausibly within the scope of a consumer reporting agency’s ability to check for accuracy, or whether it implicated a legal issue better left to the courts.

Determining if Midland owned the debt was beyond the scope of what a credit agency might reasonably be expected to investigate. That Midland withdrew its small-claims lawsuit doesn’t mean that Midland didn’t own the debt, and Amorah does not plead that a court adjudicated the matter. She argues that Midland offered insufficient evidence to show ownership. But a credit agency is not qualified to assess whether a furnisher provided sufficient evidence of ownership. Amorah’s arguments about Midland’s ownership belong in a lawsuit against Midland, not in an FCRA complaint against the defendants. The better-positioned actor, see Albrecht, 139 S. Ct. at 1680, to resolve the disputed ownership issue is a court, not a credit agency.

7th Cir.: CRAs need not resolve legal disputes under the FCRA

Steven Uhrich

Link: Denan v. Trans Union LLC, No. 19-1519 (May 11, 2020). The N.D. Ill. decision is available via RECAP here.

The U.S. Court of Appeals for the Seventh Circuit has joined the First, Ninth, and Tenth Circuits in holding that a consumer’s defense to a debt “is a question for a court to resolve in a suit against the [creditor,] not a job imposed upon consumer reporting agencies by the [Fair Credit Reporting Act].” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 891–92 (9th Cir. 2010). This decision closely follows the reasoning laid out in the court’s non-precedential decision in Humphrey v. Trans Union, LLC, 759 F. App’x 484 (7th Cir. 2019).

In Denan, the Plaintiff took loans out from two tribal lending enterprises that charged over 300% interest. The loan agreements claimed that by virtue of sovereign immunity, they were governed by tribal law and not the law of the states—New Jersey and Florida in this case—which render any agreements with such high interest rates void ab initio.

Denan disputed the accuracy of his credit report with Trans Union because he believed the loan was invalid and there was no legal obligation for him to repay it. After receiving Denan’s correspondence, Trans Union investigated the matter and concluded its process by informing Denan that it verified that the information was accurate.

Denan sued Trans Union under two theories: § 1681e(b), for failing to maintain reasonable procedures to ensure maximum possible accuracy, and § 1681i which requires consumer reporting agencies like Trans Union to “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate.”

The panel (Wood, Bauer, and Brennan) rejected both theories. As to the e(b) claim, the court honed in on the notion that CRAs are not in the position of courts to resolve “non-adjudicated” legal defenses to the debt:

“The collectability of plaintiffs’ loans here requires resolution of three legal issues: whether the choice‐of‐law provisions in plaintiffs’ loan agreements are enforceable; whether New Jersey and Florida lending laws render plaintiffs’ loans void; and whether tribal sovereign immunity shields Plain Green and Great Plains from the application of New Jersey and Florida laws. The power to resolve these legal issues exceeds the competencies of consumer reporting agencies.”

As to the i claim, the court distinguished Henson v. CSC Credit Servs., 29 F.3d 280 (7th Cir. 1994), where the CRA reported information from a court record that the clerk had entered erroneously:

“Henson never addressed the issue before us: whether §§ 1681e(b) and 1681i compel consumer reporting agencies to adjudicate a consumer’s legal defenses to a debt . . . the inaccuracy challenged in Henson (whether a judgment was issued against the consumer) was straightforward, fact based, and could be resolved through a reasonable investigation. But plaintiffs here insist Trans Union should settle legal issues involving choice-of‐law clauses, state usury laws, and sovereign immunity doctrines—all issues only a court can resolve.”

The panel does recognize numerous times in its opinion that companies such as lenders that furnish information are tasked with accurately reporting liability. See 12 C.F.R. § 1022.41(a): “Accuracy” for furnishers means information that “correctly [r]eflects … liability for the account.”

FCRA Claims Evade Sovereign Immunity in 7th Cir.

Steven Uhrich

Quick note: SCOTUS denied certiorari review of a Fourth Circuit Court of Appeals decision in Robinson v. United States Dep’t of Educ., 917 F.3d 799 (4th Cir. 2019), cert. denied 590 U. S. __ (U.S. April 20, 2020)(19-512). You can look into that case at SCOTUSblog.

This leaves unresolved a circuit split regarding whether the Fair Credit Reporting Act authorizes consumers to file civil suits against federal governmental agencies under 15 U.S.C. § 1681n and § 1681o.

So, for now, these claims are viable in Illinois, Wisconsin, and Indiana district courts, under Bormes v. United States, 759 F.3d 793 (7th Cir. 2014).

Justice Thomas penned an interesting dissent to the denial, available here.

Because of the Court’s inaction, this disparity will persist. Contrary to the Department’s speculation, this Circuit split shows no signs of resolving itself. In fact, the Seventh Circuit recently reaffirmed its position in Meyers v. Oneida Tribe of Wis., 836 F. 3d 818 (2016). In holding that the FCRA’s general civil enforcement provisions do not abrogate tribal sovereign immunity, the court reaffirmed and distinguished its earlier decision in Bormes, which recognized a waiver of federal sovereign immunity. 836 F. 3d, at 826. In that court’s view, the ordinary meaning of “government,” as used in the FCRA’s definition of “person,” clearly encompasses the Federal Government but does not include Indian tribes. Ibid. Thus, absent intervention from this Court, or a majority of active judges on the Seventh Circuit, the Courts of Appeals will remain in conflict.

7th Circuit: Spokeo Dooms FCRA 1681b Claim

Steven Uhrich

Link: Crabtree v. EXPERIAN INFORMATION SOLUTIONS, INC., Court of Appeals (7th Cir. 2020).

The 7th Circuit, in a decision by Judge Scudder, affirmed an opinion by District Court Judge Norgle dismissing a consumer’s FCRA claim—and, interestingly, a counterclaim by Experian—for lack of Article III standing and thus subject matter jurisdiction.

The claim was simple: Experian, through an agent, sold a copy of his consumer report for a purpose not allowed under the Fair Credit Reporting Act, 15 U.S.C. 1681b(a). The Complaint is available here.

The Complaint notes that Western Sierra (the company Experian sold the data to) is a debt settlement company and thus can’t make a firm offer of credit, but the 7th Circuit decision doesn’t mention that.

Instead, the decision focuses in on the fact that the Plaintiff couldn’t testify that he had not received a firm offer of credit from Western Sierra, and that the disclosure was made five years prior to filing the lawsuit.

After reviewing the 7th Circuit progeny of Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016): Gubala v. Time Warner Cable, Inc., 846 F. 3d 909, Robertson v. Allied Solutions, LLC, 902 F. 3d 690, and Casillas v. Madison Avenue Associates, 926 F.3d 329 (7th Cir. 2019) (Discussed on this blog here), the panel concluded that the injuries were not sufficient to meet the Article III standard:

Crabtree has identified no harm of any kind. Like the plaintiff in Casillas who never attempted to respond to the debt collector and therefore was not affected by the incomplete instructions, Crabtree admitted in sworn testimony that he would have thrown any firm offer from Western Sierra in the trash. Indeed, he only learned about these events after being contacted by his lawyer nearly five years later. If this communication had not occurred, Crabtree would have gone on completely unaware of and unaffected by any prescreen list. This all falls well short of the concreteness mandated by Article III. Crabtree had to come forward with something showing that he did not receive a firm offer, that Western Sierra would not have honored a firm offer, that he was affected by the lack of a firm offer, or that he suffered any actual emotional damages. He failed on each possible ground, leaving him without the concrete injury necessary for Article III standing.

However, the panel clearly left the door open to similar claims on different facts:

Do not overread our conclusion to mean that a claim like Crabtree’s fails as a matter of course. Based on Spokeo‘s principles, there is no question that a consumer reporting agency’s unauthorized disclosure of consumer credit information can be a concrete injury. The common law recognized some right to privacy that “encompass[es] the individual’s control of information concerning his or her person.” U.S. Dep’t of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 763 (1989). And FCRA specifically articulates a statutory right to privacy in consumer credit reports. See 15 U.S.C. § 1681(a). We have previously recognized this right to privacy in such information. See Cole v. U.S. Capital, Inc., 389 F.3d 719, 728 (7th Cir. 2004) (holding that a plaintiff stated a claim when a lender obtained her credit data without giving her the benefit of a firm offer, one of the permissible purposes under FCRA).

The disclosure of consumer credit information, absent any exchanged-for consumer benefit contemplated by FCRA, can constitute an injury-in-fact for the purpose of Article III standing. (emphasis added).

Experian’s counterclaim alleged that the Plaintiff also obtained consumer reports for an unlawful purpose: for the purpose of initiating the lawsuit at issue. The panel mostly agreed with the District Court judge that Experian could not rely on its costs incurred in defending the case under Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998), but found on independent grounds that Experian did not sufficiently allege how its reputation was injured by Plaintiff’s suit. The panel also said that attorney fees were not enough by themselves to sustain a counterclaim:

Put more simply, a party injured only by incurring defense costs—while injured for constitutional purposes—must find some statutory or common law hook for its motion or claim to recover those costs.

and the FCRA provided no such “hook”:

These statutory provisions make clear that Congress passed FCRA to protect consumers’ right to privacy in their credit data. The statutory objective was to confer protections on consumers, not to arm consumer reporting agencies with rights against consumers.

7th Circuit Rejects Plaintiff’s FDCPA Claim For Listing Two Creditors

Steven Uhrich

Link: Dennis v. Niagara Credit Solutions, Inc., No. 19-1654 (7th Cir. 2019)

The Seventh Circuit rejected an appeal seeking to overturn a decision by Richard L. Young of the Southern District of Indiana. Judge Young dismissed plaintiff’s claim via judgment on the pleadings.

Plaintiff filed suit alleging that the defendants violated § 1692g(a)(2) of the FDCPA by “fail[ing] to identify clearly and effectively the name of the creditor to whom the debt was owed:”

“Listing two separate entities as “creditor” — one of them a debt buyer, which would likely be unknown to the consumer — and not explaining the difference between those two creditors, then stating that Niagara was authorized to make settlement offers on behalf of an unknown client — could very likely confuse a significant portion of consumers who received the letter as to whom the debt was then owed.”

Since the standard of review is de novo, the panel dove into its own analysis of the claim and agreed with the district court:

This is a meritless claim. In Smith, the original and current creditors were the same. In this case, where a consumer’s debt has been sold, it is helpful to identify the original creditor (which the customer is likely to recognize as he had done business with them in the past) and the current creditor (which the customer may not recognize, and which the FDCPA requires the letter to identify). An unsophisticated consumer will understand that his debt has been purchased by the current creditor—an example of the type of “basic inference” we believe such consumers are able to make. The defendants’ letter thus “provides clarity for consumers; it is not abusive or unfair and does not violate § 1692g(a)(2).” Smith, 926 F.3d at 381.

The case was argued by David Philipps and Boyd Gentry.

Electronic Access to 1692g Validation Notice Not Good Enough

Steven Uhrich

LAVALLEE v. MED-1 SOLUTIONS, LLC, No. 17-3244 (7th Cir. 2019).

The 7th Circuit affirmed a decision out of the Indianapolis Division of the Southern District of Indiana awarding summary judgment in favor of the plaintiff-consumer on their FDCPA claims.

The debt collector in this case sent messages to the plaintiff/debtor via email regarding alleged medical debt. The emails had links to a website where the plaintiff would have had to click a few links to download a .pdf file containing the validation notice required by 15 U.S.C. § 1692g(a) of the Fair Debt Collection Practices Act. The plaintiff never accessed the file (thus never receiving the notice) and the debt collector’s system knew the plaintiff never accessed the files.

The debt collector subsequently contacted the plaintiff and never sent any other validation notices.

Plaintiff, represented by Robert E. Duff, argued that the debt collector simply making the notice available electronically via a process the plaintiff would need to go through did not satisfy § 1692g(a) of the Act. The district court found in favor of plaintiff on summary judgment, and this 7th Circuit appeal followed.

The panel agreed with the district court that the plaintiff had standing under Article III of the U.S. Constitution and Spokeo.

As for the merits, the panel sided with plaintiffs that the emails were not communications for purposes of the FDCPA:

Everyone agrees that the November 12 phone conversation between Lavallee and a Med-1 employee was a “communication.” And if it was the initial communication, Med-1 was required to send Lavallee a validation notice within five days. Med-1 concedes that it did not. So to prevail on appeal, Med-1 must persuade us that its March and April emails were “communications” under the FDCPA.
As we’ve just explained, to qualify as a “communication” under the Act, a message must “convey[] … information regarding a debt.” Id. Med-1’s emails conveyed three pieces of information: the sender’s name (Med-1 Solutions), its email address, and the fact that it “has sent … a secure message.” The emails say nothing at all about a debt.
Med-1 insists that the emails should count as communications because they contain the name and email address of the debt collector. We disagree. Though we haven’t yet addressed the FDCPA’s definition of “communication,” the Sixth and Tenth Circuits have held that to constitute a communication under the Act, a message must at least imply the existence of a debt. In Brown v. Van Ru Credit Corp., the Sixth Circuit held that a message that didn’t “imply the existence of a debt” wasn’t a communication because “whatever information [was] conveyed [could not] be understood as `regarding a debt.'” 804 F.3d 740, 742 (6th Cir. 2015). In Marx v. General Revenue Corp., the Tenth Circuit considered a fax that didn’t “indicate to the recipient that [it] relate[d] to the collection of a debt” or “expressly reference debt,” and that could not “reasonably be construed to imply a debt.” 668 F.3d 1174, 1177 (10th Cir. 2011). The fax was therefore not a “communication” under the Act. Id.

Moreover, the process by which plaintiff would have had to go through was

There is a second and independent reason why the emails don’t measure up under § 1692g(a): They did not themselves contain the enumerated disclosures. To access the validation notice, Lavallee would have had to (1) click on the “View SecurePackage” hyperlink in the email; (2) check a box to sign for the “SecurePackage”; (3) click a link to open the “SecurePackage”; (4) click on the “Attachments” tab; (5) click on the attached .pdf file; and (6) view the .pdf with Adobe Acrobat or save it to her hard drive and then open it.
At best, the emails provided a digital pathway to access the required information. And we’ve already rejected the argument that a communication “contains” the mandated disclosures when it merely provides a means to access them. See Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872, 875 (7th Cir. 2000) (holding that a debt collector did not satisfy § 1692g(a) by providing a phone number that the debtor could call to obtain the required information).
Med-1 analogizes the information available through a hyperlink in an email to the information printed on a letter inside an envelope. The analogy is inapt.

Interesting note: the CFPB filed an amicus brief arguing that the debt collector failed to abide by the E-Sign Act, 15 U.S.C. §§ 7001 et seq. The CFPB argued that where a statute or regulation “requires that information … be provided or made available to a consumer in writing,” the E-Sign Act imposes conditions on the use of an electronic record to satisfy that disclosure requirement.

Here’s an excerpt from their brief explaining the basic requirement:

Under § 101(c), “if a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if” various conditions are met. Id. Those conditions include the consumer’s “affirmative[] consent[] to such use”; the provision to the consumer of a “clear and conspicuous statement” informing her of her right to withdraw consent and to receive the disclosure “on paper or in nonelectronic form”; and a disclosure of the “hardware and software requirements for access to and retention of the electronic records,” along with the consumer’s electronic consent (or confirmation of consent) “in a manner that reasonably demonstrates that the consumer can access information in the electronic form.”

7th Circuit: No Harm No Foul on FDCPA Claim

Steven Uhrich

Link: Casillas v. Madison Ave. Associates, Inc., 926 F. 3d 329 (7th. Cir. 2019)

Plaintiff, represented by the law firms Philipps & Philipps and Berger Montague, brought a claim under the Fair Debt Collection Practices Act 15 U.S.C. § 1692g(a). Since the decision creates a circuit split, the opinion was circulated but a majority did not favor a rehearing en banc. Chief Judge Wood, joined by Circuit Judges Rovner and Hamilton, filed a dissent from the denial of rehearing en banc.

The Court briefly described the claim before finding it insufficient under the 7th Circuit’s prior Article III standing analysis in Groshek v. Time Warner Cable, Inc., 865 F.3d 884 (7th Cir. 2017):

[A] notice must include, among other things, a description of two mechanisms that the debtor can use to verify her debt. First, a consumer can notify the debt collector “in writing” that she disputes all or part of the debt, which obligates the debt collector to obtain verification of the debt and mail a copy to the debtor. Id. § 1692g(a)(4). A failure to dispute the debt within 30 days means that the debt collector will assume that the debt is valid. Id. § 1692g(a)(3). Second, a consumer can make a “written request” that the debt collector provide her with the name and address of the original creditor, which the debt collector must do if a different creditor currently holds the debt. Id. § 1692g(a)(5). Madison’s notice conveyed all of that information, except that it neglected to specify that Casillas’s notification or request under those provisions must be in writing.

The only harm that Casillas claimed to have suffered, however, was the receipt of an incomplete letter—and that is insufficient to establish federal jurisdiction. As the Supreme Court emphasized in Spokeo, Inc. v. Robins, Casillas cannot claim “a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” ___ U.S. ___, 136 S.Ct. 1540, 1549, 194 L.Ed.2d 635 (2016). Article III grants federal courts the power to redress harms that defendants cause plaintiffs, not a freewheeling power to hold defendants accountable for legal infractions. Because Madison’s violation of the statute did not harm Casillas, there is no injury for a federal court to redress. (Emphasis added).

The panel ( Sykes and Barrett, Circuit Judges, and Durkin, District Judge) emphasized that they were disagreeing with the recent 6th Circuit Macy case:

Casillas’s best case is from the Sixth Circuit, which sees things differently than we do. In Macy v. GC Services Limited Partnership, the defendant violated the very same requirements that Madison did here: it failed to notify the plaintiffs that they had to dispute their debts in writing to trigger the protections of the Fair Debt Collection Practices Act. 897 F.3d 747, 751 (6th Cir. 2018). Like Casillas, the plaintiffs did not allege that they tried or had any intention of trying to contact the debt collector to verify the debt. Id. at 758. Instead, they claimed that not knowing about the writing requirement “could lead the least-sophisticated consumer to waive or otherwise not properly vindicate her rights under the [Act].” Id. The Sixth Circuit held that the plaintiffs had alleged a concrete injury because “[w]ithout the information about the in-writing requirement, Plaintiffs were placed at a materially greater risk of falling victim to `abusive debt collection practices.'” Id. (quoting 15 U.S.C. § 1692(e)).

Judge Wood had two major objections, one procedural and one substantive.:

 In demanding proof of injury, we need to guard against pushing a merits judgment into the Article III injury-in-fact inquiry; we also need to ensure that we are not, de facto, demanding fact pleading. The Supreme Court under-scored the standing/merits distinction in Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014), in which it took care to distinguish between an adequate allegation of injury-in-fact for standing purposes and the question whether that asserted injury fell within the scope of the statute on which the plaintiff was relying (there, the Lanham Act). Id. at 125-28, 134 S.Ct. 1377. It is possible to point to a real injury (and thus pass the Article III hurdle) but still lose on the merits for failing to state a claim on which relief can be granted. See FED. R. CIV. P. 12(b)(6).
We additionally need to be sure that we are not returning to a fact pleading regime, as it is not required or even acceptable under Federal Rule of Civil Procedure 8(a)(2) and it is not specifically required under this Act. We repeatedly have stressed that the Federal Rules of Civil Procedure use a notice-pleading standard, not a fact-pleading standard. A complaint need not include allegations about every element of a claim, as long as it meets the plausibility standard established in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

As for the substantive issue, she felt the panel got it dead wrong:

[P]eople might not appreciate the need for a written record of their dealings with the debt collector and thus without a reminder that they must reduce their concerns to writing, they are likely to forfeit the important substantive rights the Act provides for them. When they receive a letter, they are often encouraged to call a 1-800 telephone number. But someone who responds to a debt-collection letter in that way will be put into a “Gotcha!” situation. No notification in writing equals greatly diminished protection under the Act.
It is a fair inference from Casillas’s complaint that Madison’s omissions at a minimum put her in imminent risk of losing the many protections in the Act that are designed to regulate the debt-collection process as it goes forward. The right to verification, the right to have the name and address of the original creditor, the right to cessation of debt-collection activities, and others, are far from bare procedural protections—they are protections that serve as the gateway to the Act’s substantive regime.

I am no fortune teller, but something tells me this split will end up before the Supreme Court sooner or later. Stay tuned.

7th. Cir.: Online Estimates From Zillow and Redfin Not Actionable

Steven Uhrich

Link: Patel v. Zillow, Inc., No. 18-2130 (7th Cir. 2019).

The 7th Circuit affirmed two decisions from the Northern District of Illinois, confirming that a disgruntled property owner can’t sue Zillow (and likley similar sites like Redfin or Trulia) for the low “Zestimate” on its website. Plaintiff, on behalf of the class, alleged it was not licensed to issue appraisals and that its activity violated the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS §§ 510/1 to 510/7.

The court confirmed that the licensing statute at issue (  Illinois Real Estate Appraiser Licensing Act, 225 ILCS 458/1 to 458/999-99) does not confer a private right of action, and that as for the IUDTPA claim, that

the district judge was right to observe that the statute deals with statements of fact, while Zestimates are opinions, which canonically are not actionable. See, e.g., Sampen v. Dabrowski, 222 Ill. App. 3d 918, 924-25 (1st Dist. 1991) (where a valuation is explicitly labeled an estimate, there is no deception)…

FDCPA Overshadowing Claim Denied Where No Demand or Requirement to Pay

Steven Uhrich

Link: Nieto v. MRS ASSOCIATES (N.D. Ill. Nov. 9 2018).

Plaintiff moved for summary judgment on their FDCPA 1692g claim, arguing that the Plaintiff received a second collection letter within the 30 day period they may dispute the debt (the “validation period”).

Plaintiff relied on prior decisions that an “unexplained demand for payment within the thirty-day validation period creates confusion by contradicting, and thus rendering ineffective, the validation notice.” Olson v. Risk Mgmt. Alternatives, Inc.,366 F.3d 509, 512 (7th Cir. 2004).

Plaintiff also relied on Bartlett v. Heibl, 128 F. 3d 497 (7th Cir. 1997),
 in which the Seventh Circuit held that demanding payment within a specific amount of time that is contrary to the 30-day validation period constitutes an FDCPA violation.

Judge Robert Blakey distinguished Bartlett and entered summary judgment for the Defendant:

This Court finds that the second letter is distinguishable from the letter in Bartlett in two crucial ways. First, unlike in Bartlett, there is no “demand” for payment anywhere in the second letter; the second letter neither states that Plaintiff “must” take action, nor threatens legal action if Plaintiff does not take action. [49-3]. Second, the letter in Bartlettcontained both the 30-day validation notice and a threat that the debtor would be sued if he did not take action within 1 week. Bartlett, 128 F.3d at 499. The second letter here, in contrast, merely conveys three settlement options, without mentioning or referencing the 30-day validation notice contained in the first letter. [49-3]. Thus, there is simply no “juxtaposition of the one-week and thirty-day crucial periods” that the Seventh Circuit cautioned against in Bartlett. 128 F.3d at 501.

FDCPA Overshadowing Claim Rejected

Steven Uhrich

Link: NADBORSKI v. RECEIVABLE MANAGEMENT SERVICE CORPORATION (N.D. Ill. Nov. 8, 2018).

Plaintiff, represented by the Consumer Law Center, P.C., filed a class action alleging that the following language overshadowed the debtor’s rights under 1692g:


This is a request for payment of this account which has been placed by VONAGE for collection. Please remit your payment to the address above.
If you have not been contacted by an RMS representative, you will be receiving a call to bring this matter to a resolution. Should you receive this letter after a discussion with our representative, we thank you for your cooperation.

The Court, Ronald A. Guzman, disagreed:


Plaintiff’s assertion that the letter’s statement that he would be receiving a call contradicts the 30-day verification notice is just the type of idiosyncratic and unreasonable interpretation that the Seventh Circuit has stated is not violative of the FDCPA. Even an unsophisticated consumer, as defined above, would not believe that the promised phone call to attempt to resolve the matter somehow cancels out his right to seek verification of the debt.

. . .


According to Plaintiff, the letter is further confusing and overshadows his rights because RMS’s request that the consumer include the claim number in all communications[1]“contradicts the fact that a consumer does not need to provide specific information or wording in order to dispute a debt.” (Pl.’s Resp., Dkt. # 24, at 5.) This contention verges on the ridiculous.