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

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.

Court Dismisses ECOA Suit Claiming Lender Demanded Consumer Retract Credit Disputes

Link:  KOLODZINSKI v. PENTAGON FEDERAL CREDIT UNION, Case No. 17-CV-1768-JPS (E.D. Wisc. Aug. 28, 2018)

SmithMarco PC filed a suit on behalf of Plaintiff alleging that he was discriminated against in violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq. because when he applied for a loan, the loan officer told him he had to remove the disputes from his credit report in order to obtain the loan. Once he did so, his credit score went down so low he could no longer obtain the loan.

Plaintiff argued that because his right to dispute credit lines derives from the Fair Debt Collection Practices Act and Fair Credit Reporting Act,  Defendant violated ECOA which provides that a creditor cannot discriminate against an applicant “because the applicant has in good faith exercised any right under this chapter.” 15 U.S.C. § 1691(a)(3). “[T]his chapter” refers to Chapter 41 of Title 15, entitled the Consumer Credit Protection Act (“CCPA”) which has within it the FDCPA and FCRA.

The court disagreed, finding that the FDCPA confers on consumers a private right of action to remedy violations of the statute, so ECOA just requires lenders not to discriminate against consumers who file such a private action.

As to the FCRA, the court drew a distinction between a duty and a right, stating that Plaintiff has not alleged that any person or consumer reporting agency failed to properly provide notice of a dispute in violation of Section 1681s-2(3), or that he exercised his right under the FCRA to seek a remedy for such a violation:

A consumer’s dispute is a precondition to the triggering of a duty; it is not an affirmative right conferred by the statute.

The court also noted that Plaintiff’s reading of the statute did not comport with Regulation B issued by the Consumer Financial Protection Bureau.

 Defendant has chosen to restrict the type of credit history it will consider to dispute-free reports, and that restriction is applied to all credit applicants. Plaintiff does not allege that this restriction is applied in a nonuniform way, and Defendant confirms in its briefing that this restriction is applied to every credit applicant.

Accordingly the court dismissed the lawsuit as failing to state a claim under Rule 12(b)(6).