Fifth Circuit Rules Consumer’s § 1692e(8) FDCPA Claim Not Foreclosed by Consumer’s Failure to Timely Dispute Debt.


The appellate court refused to declare the proper relationship between the FDCPA, FCRA and the CCPA.




In a 3-0 decision yesterday, the Fifth Circuit Court of Appeals ruled that the debt dispute and verification requirements of § 1692g of the Fair Debt Collection Practices Act do not carry over to § 1692e(8).  In doing so, the Fifth Circuit affirmed a lower court’s judgment against a collection agency, deciding a question of law of first impression in the Fifth Circuit that a collection agency’s violation of § 1692e is not contingent on a consumer’s compliance with the validation and dispute requirements of § 1692g – holding that the consumer’s failure to dispute the debts within 30 days of the collection agency’s validation notices did not bar his FDCPA claim based on the collection agency’s failure to report that the debts were disputed.     


In the case, Sayles v. Advanced Recovery Systems, Inc., No. 16-60640, 2017 WL 2872343 (3d Cir. July 6, 2017), the consumer failed to pay medical bills, which were subsequently placed for collection with a collection agency.  The collection agency sent § 1692g(a) “validation” notices to the consumer regarding the unpaid debts.  The consumer failed to respond to the notices verbally or in writing within thirty (30) days after receiving the notices from the collection agency pursuant to § 1692g(b) of the FDCPA.  Several months later, an unsigned letter copied from a credit repair organization website arrived at the collection agency by fax.  It requested untimely “validation” of “all claims” (otherwise unidentified) pursuant to § 1692g(b) of the FDCPA, and stated only that “your claim” is “disputed” with no reason given.  The collection agency disregarded the “signature format” credit repair organization “dispute” letter.  Thereafter, the consumer sued the collection agency accusing it of violating § 1692e(8) by failing to report his “disputed debt as disputed.” 


Through discovery, the collection agency learned that the “dispute” letter was virtually a verbatim reproduction of a form from a non-party Internet-based credit repair organization website maintained by a company called Credit Info Center.  However, unlike Credit Info Center’s “model” letter, the consumer’s version did not include any account numbers and made no effort whatsoever to explain or document any “dispute.”  No excerpts from the consumer’s credit history were enclosed.  The collection agency also learned through discovery that a paralegal employed by the consumer’s New Jersey law firm drafted the “dispute” letter and faxed it on the consumer’s behalf to the collection agency in Mississippi from New Jersey. 

The collection agency filed a summary judgment motion.  The collection agency asserted in its motion that it was entitled to disregard the deliberately uninformative form letter from a “credit repair organization” as permitted under § 1681s-2(a)(8)(D)(F) and (I).  The collection agency argued that it is a “furnisher of information” under the Fair Credit Reporting Act.  The FCRA, in § 1681s-2(a)(3), expressly requires a furnisher to provide a credit reporting agency with notice that an account is disputed by the consumer; ‘[i]f the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer.” However, § 1681s-2(a)(8) provides that the duty to report disputes does not apply where the consumer’s dispute is “frivolous or irrelevant.” 


The collection agency also argued in its summary judgment motion that the consumer’s § 1692e(8) claim was foreclosed because of the consumer’s failure to timely dispute any of the debts in question within 30 days after his receipt of proper § 1692g notices from the collection agency; that the failure to subsequently report the accounts as “disputed” was not a material misrepresentation because nothing was ever legitimately “dispute” (or disputable) by the consumer himself; and that the failure to report any of the accounts as “disputed” under these circumstances did not result in any sufficiently “concrete” injury to the consumer to confer Article III standing according to Spokeo Inc. v. Robins. 


The district court entered judgment for the consumer, finding that the collection agency violated § 1692e(8) of the FDCPA; that § 1692e(8) does not incorporate the validation and dispute requirements found in § 1692g; and that the consumer’s injury was concrete, satisfying all elements of standing required under Spokeo


The collection agency filed a notice of appeal to the Fifth Circuit contending the district court erred in issuing its judgment because it failed to address or reconcile its interpretation of § 1692e with the collection agency’s right to disregard non-bona fide direct consumer disputes and/or form letters from “credit repair organizations” under § 1681s-2(a)(8)(D)(F) and (I) of the FCRA.  The collection agency also contended that the district court erred by finding that the collection agency had violated § 1692e(8).  Finally, the collection agency contended that, even if it violated § 1692e(8), the consumer did not suffer any concrete injury and, therefore, lacked Article III standing to bring his suit. 

The Fifth Circuit was not persuaded by any of the collection agency’s arguments and, therefore, affirmed the judgment of the district court. 


Considering the number of deliberately uninformative generic form letter “disputes” that are transmitted daily to ACA member agencies who are credit information providers, ACA submitted a “friend of the court” brief to the Fifth Circuit in Sayles on December 22, 2016 to support its agency member’s position in the case.  To promote accuracy in credit reporting and to discourage fraudulent dispute letters like the one at issue in the Sayles case, ACA’s amicus brief urged the appellate court to reconcile the apparent conflict between the FCRA’s procedures allowing a credit information provider to disregard non-bona fide letter disputes and § 1692e(8)’s requirement to report disputed debts as disputed.  Although ACA is disappointed that the Fifth Circuit did not substantively address the proper relationship between § 1692e(8) of the FDCPA (requiring, among other things, the reporting of a disputed debt, as disputed) and § 1681s-2(a)(8)(D)(F) and (I) of the FCRA (addressing a credit information provider’s obligation to respond to non-bona fide direct credit information disputes generated by consumer lawyers or credit repair organizations masquerading as a consumer), this loss does not take away from the 31 industry-favorable decisions (wins) ACA has helped to achieve for its members through the Industry Advancement Program. 


If you missed any of the articles previously published in ACA Daily that provided more detailed information about Industry Advancement Program supported cases, like the Sayles case, you can always see the archived articles on the Industry Advancement Program website. Watch for updates when decisions are issued in these cases and learn more about new cases supported by the Industry Advancement Program in the future by reading ACA Daily and logging onto the Industry Advancement Program website throughout the year.


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