The United States Court of Appeals for the Seventh Circuit recently affirmed a district court’s grant of plaintiffs’ motions for summary judgment and held that the defendant debt collector violated the Fair Debt Collection Practices Act (“FDCPA”) by communicating plaintiffs’ debts to credit reporting agencies without stating that plaintiffs disputed the debts. See Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337 (7th Cir. 2018). In the case, defendant attempted to collect debts owed by plaintiffs, and plaintiffs’ counsel sent a letter to defendant in response. Each letter stated: “This client regrets not being able to pay, however, at this time they are insolvent, as their monthly expenses exceed the amount of income they receive, and the amount reported is not accurate.” Defendant nonetheless reported the debts to credit reporting agencies but did not indicate that plaintiffs disputed the debt. Plaintiffs then brought these actions alleging violations of the FDCPA. See 15 USC 1692e(8) (prohibiting debt collectors from “[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”). Plaintiffs moved for summary judgment and, in opposition, defendant argued: (i) plaintiffs lacked standing; (ii) plaintiffs never disputed the debt; (iii) the alleged FDCPA violations were not material; and (iv) any alleged violations were the result of a bona fide error. The district court granted plaintiffs’ motions for summary judgment.
On appeal, the Seventh Circuit affirmed. First, it held that plaintiffs had standing to bring this action. Despite defendant’s argument that plaintiffs did not suffer an injury, plaintiffs suffered “‘a real risk of financial harm caused by an inaccurate credit rating.’” Second, the Court held that the letters sent by plaintiffs’ counsel properly disputed the debt under the FDCPA. The fact that the letters did not include the word “dispute” was irrelevant. Likewise, defendant’s argument that it accurately calculated the debt did not change the outcome because “Section 1692e(8) does not require an individual’s dispute be valid or even reasonable. Instead, the plaintiff must simply make clear that he or she disputes the debt.” Third, the Court found that any failure to inform a credit reporting agency that a debt is disputed is always material under the FDCPA because “this information will be used to determine the debtor’s credit score.” Finally, the Court rejected the argument that the violations were a result of a bona fide error because the FDCPA’s bona fide error defense only applies to an error of fact, not an error of law. Here, defendant’s error was its interpretation of the FDCPA and what constituted a disputed debt, which was an error of law. As such, the Court affirmed the district court’s decisions granting plaintiffs’ motions for summary judgment.