When a consumer disputes their debt, an accepted and conservative practice is for the data furnisher to promptly report the dispute to the consumer reporting agencies. But under what circumstances will the failure to report a dispute give rise to a violation of section 1692e(8) of the FDCPA? For example, what if a consumer or their attorney simply calls or writes and states "I dispute this" without providing the collector with any substantive information regarding the basis for the dispute? Does the collector violate section 1692e(8) if it fails to report that "dispute" to the consumer reporting agencies? The answer must be "no." Where a consumer has not identified any legitimate basis for disputing their responsibility for the debt as reported by the collector, a blanket statement that they "dispute" the debt, without more, is not sufficient to support a section 1692e(8) claim.
The FDCPA is sometimes referred to as a "strict liability" statute, but this is not entirely true. There are a number of provisions of the Act – and section 1692e(8) is one of them – which require a consumer to provide evidence of knowledge or intent by the collector. Section 1692e(8) prohibits a collector from communicating or threatening to communicate false credit information to any person, but only where the collector knows or should know that the credit information is false. See 15 U.S.C. § 1692e(8) (prohibits the collector from: "Communicating 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.").
The knowing failure to communicate that a "disputed" debt is disputed is a violation of section 1692e(8). Id; see also Brady v. The Credit Recovery Co., 160 F.3d 64, 67 (1st Cir. 1998) (section 1692e(8) "requires a debt collector who knows or should know that a given debt is disputed to disclose its disputed status to persons inquiring about a consumer's credit history.") (emphasis added); Sunga v. Rees Broome, 2010 WL 1138319, *4 (E.D. Va. Mar.18, 2010) (dismissing section 1692e(8) claim: "Under the express terms of § 1692e(8), Plaintiff must allege sufficient factual allegations supporting the finding that Defendant knew or should have known that the debt amount as stated in the demand letter was false.").
Thus, if the collector knows that the debt is subject to a true "dispute" it may not knowingly transmit "false" credit information about the debt to consumer reporting agencies. But what exactly would make the credit information "false" within the meaning of the FDCPA? We know that not all "false" statements by a collector will violate the FDCPA. To the contrary, courts around the country have recognized that an allegedly false or misleading statement does not violate the FDCPA unless the statement is "material." See, e.g., Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033-34 (9th Cir. 2010) (no violation of sections 1692e and 1692f of the FDCPA where collection complaint sought correct amount of debt, even though the elements comprising the total were not accurately described); Hahn v. Triumph Partnerships LLC, 557 F.3d 755, 757-58 (7th Cir. 2009) (letter that accurately stated total amount due did not violate sections 1692e or e(2) of the FDCPA: "The statute is designed to provide information that helps consumers to choose intelligently, and by definition immaterial information neither contributes to that objective (if the statement is correct) nor undermines it (if the statement is incorrect)."); Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 646 (7th Cir. 2009) (letter describing debt, which included interest applied by original creditor, as the "principal" amount owed to collector did not violate section 1692e: "If a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA - even if it is false in some technical sense."); Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 596 (6th Cir. 2009) (collection complaint that described an unpaid credit card debt as "money loaned" did not violate section 1692e); Peters v. General Serv. Bureau, Inc., 277 F.3d 1051, 1055-56 (8th Cir. 2002) (even "literally false" statements may not violate the Act, if they are merely "susceptible of an ingenious misreading.").
Thus, if the collector accurately reports the amount of the debt, the failure to report an unsubstantiated dispute made by the consumer is not "material" and does not violate section 1692e(8). A "material" misstatement is one that is "genuinely misleading." Donohue, 592 F.3d at 1034. As the Ninth Circuit has made clear, "In assessing FDCPA liability, we are not concerned with mere technical falsehoods that mislead no one, but instead with genuinely misleading statements that may frustrate a consumer’s ability to intelligently choose his or her response." Donohue, 592 F.3d at 1034 (emphasis added).
The consumer must provide the collector with information showing they have a legitimate, good faith dispute concerning the amount of the debt as reported to the consumer reporting agencies. If the consumer does so, the collector’s subsequent failure to report the dispute to the consumer reporting agencies may be knowingly and "materially" false in violation of section 1692e(8). By contrast, if the consumer has not provided information showing that they have a meritorious dispute, then the collector’s failure to subsequently report the debt as "disputed" would be, at best, a "mere technical falsehood" that does not violate the FDCPA. Donohue, 592 F.3d at 1034
This reading of section 1692e(8) of the FDCPA is completely consistent with cases interpreting the Fair Credit Reporting Act ("FCRA"). For example, in Gorman v. Wolpoff & Abramson, 584 F.3d 1147, 1163 (9th Cir. 2009), the Ninth Circuit held that a furnisher’s failure to report a "meritless dispute" to a consumer reporting agency would not violate section 1681s-2(b) of the FCRA. To prevail under section 1681s-2(b), a consumer must show that the failure to report the dispute was "misleading in such a way and to such and extent that it can be expected to adversely affect credit decisions." Id. (citations, quotation marks omitted). Only a "material" or "bona fide" dispute by a consumer about their debt can support a valid claim for relief. The Gorman Court stated:
In other words, a furnisher does not report "incomplete or inaccurate" information within the meaning of § 1681s-2(b) simply by failing to report a meritless dispute, because reporting an actual debt without noting that it is disputed is unlikely to be materially misleading. It is the failure to report a bona fide dispute, a dispute that could materially alter how the reported debt is understood, that gives rise to a furnisher's liability under § 1681s-2(b).
The holding in Gorman dovetails with decisions of courts around the country which have also required consumers to prove a material dispute in order to prevail under section 1681s-2(b) of the FCRA. See Chiang v. Verizon New England Inc., 595 F.3d 26, 37-38 (1st Cir. 2010) (affirming judgment for furnisher on section 1681s-2(b) claim where consumer failed to prove "actual inaccuracy" in credit report); Noel v. First Premier Bank, 2012 WL 832992, *10 (M.D. Pa. March 12, 2012) (granting motion to dismiss consumer’s section 1681s-2(b) claim because "absent a bona fide dispute, Defendant had no obligation to mark the account disputed"); Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 150 (4th Cir. 2008) (affirming jury verdict for consumer where reporting of the debt without mention of the consumer’s dispute might have been "misleading in such a way and to such an extent that it can be expected to have an adverse effect.").
There is no reason to believe that Congress wanted a consumer "dispute" to be treated one way under the FCRA and another way under the FDCPA. Under the FCRA, a collector may deem a dispute to be "frivolous or irrelevant" if the consumer fails to provide the collector with sufficient information to investigate. See 15 U.S.C. § 1681s–2 (a)(8)(F)(i)(I); 16 C.F.R. § 660.4(f). The same standard must hold true under the FDCPA. At the Noel Court observed, "Rather than being fair and equitable to the consumer, a system which allows a consumer to inflate his credit score and thus derive a benefit from filing a frivolous dispute allows the consumer to do an end-run on the purpose of the statutory scheme." Noel, 2012 WL 832992, *7 (citation omitted).
In sum, to prevail on a claim under section 1692e(8) of the FDCPA, the consumer must prove the collector knew or should have known that it was reporting "false" credit information. The "false" information must be "materially" false, meaning that it is inaccurate in a way that could have an improper adverse effect on the consumer. If the consumer has not provided the collector with specific information demonstrating that they have a bona fide dispute about the amount the collector is reporting to the consumer reporting agencies, then the collector’s subsequent failure to report the account as "disputed" is not knowingly false and does not support a section 1692e(8) claim.