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7th Circuit: Credit Reporting of Individualized Accounts Is Not a False Representation of the Character or Amount of Debt

In a welcome rebuke of the hyper-technical arguments advanced more and more frequently by plaintiff’s attorneys, the Seventh Circuit recently held that a debt collector’s reporting of nine different $60 debts to a credit bureau was not a false representation of the amount or character of the debt under the FDCPA.  At the district court, the plaintiff complained that her credit report should have reflected a single $540 debt owed to the debt collector.  On that issue, the district court granted summary judgment for the plaintiff.  On February 7, the Seventh Circuit reversed.

The court’s opinion by Judge Easterbrook concisely presents the relevant facts:

“Diane Rhone received physical therapy from Illinois Bone and Joint Institute, which billed her $ 134 for each session.  Insurance covered all but a $ 60 co-pay per session.  Rhone did not remit her part of the bills, however, and the Institute turned to the Medical Business Bureau for debt collection.  After three years of dunning letters did not work, the Bureau reported to Equifax that Rhone owes nine debts of $ 60 each.  That led to this suit, in which Rhone contends that the Bureau had to report the aggregate debt of $ 540 rather than nine $ 60 debts.”

After pointing out the lack of any authority to support plaintiff’s position, the court observed that, in fact, there may be good reasons to report the accounts separately:

“One benefit of identifying each amount separately is that a debtor then can identify exactly which transactions are at issue.  If the Bureau had reported one $ 540 debt, Rhone might well have asserted that the report was misleading—after all, she does not owe $ 540 for any transaction.  Per-transaction reporting also shows whether some of the debts are stale (that is, whether the statute of limitations bars collection).  Consumers and credit bureaus alike may find that information valuable.”

Whether the decision has a lasting effect remains to be seen; hopefully it sends a message of caution to plaintiffs otherwise considering new and creative ways to impose liability under the FDCPA, especially in the context of alleged violations of §1692e.  The case is Rhone v. Med. Bus. Bureau, LLC, No. 17-3408, 2019 WL 479047 (7th Cir. Feb. 7, 2019).

Mark Rooney