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Is a communication between a debt collector and a credit reporting agency a communication “in connection with the collection of any debt” for purposes of the FDCPA?

In a case in which the Eighth Circuit actually found against a debtor on her claim against a collection agency based on the FDCPA, the court nevertheless adopted a standard followed by other circuits in defining when a communication is “…in connection with the collection of any debt” for purposes of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seqSarah McIvor v. Credit Control Services, Inc., No. 14-1164 (December 4, 2014).

Sarah McIvor alleged that she disputed a debt to Credit Control by making an online report to consumer reporting agency TransUnion.  She further alleged that when TransUnion contacted Credit Control to investigate the dispute, Credit Control failed to report the debt as disputed when it responded to TransUnion’s inquiry.  McIvor alleged that Credit Control violated 15 U.S.C. § 1692e(8) by communicating information about her debt to TransUnion without indicating that McIvor had disputed it, thereby conveying false credit information.

The district court entered judgment on the pleadings for Credit Control, finding that the FDCPA required McCivor to allege that Credit Control’s communications with TransUnion was both (1) false and misleading; and (2) in “connection with the collection of any debt.”   Finding the complaint did not plausibly allege either requirement, the district ruled that McIvor did not state a claim for a violation of § 1692e and dismissed her complaint. McIvor appealed.

McIvor argued to the Eighth Circuit that the communication from Credit Control to TransUnion was “false, deceptive or misleading” because Credit Control was told the debt was disputed but did not relay that information to TransUnion.  To determine if a statement from a debt collector is “false, deceptive or misleading” under the FDCPA, the Eighth Circuit views the communication through the eyes of an “unsophisticated consumer” when a consumer is the intended recipient.  Here, though, the recipient of the statement was TransUnion. Although liability under § 1692e is not limited to statements from debt collectors to consumers, the statement must have the potential to mislead or otherwise dupe someone to be actionable.  The Eighth Circuit held that the alleged failure by Credit Control to advise TransUnion that McIvor’s debt was disputed could not have mislead or duped TransUnion – because TransUnion was already aware that McIvor disputed the debt.  Indeed, it was the purpose behind TransUnion’s inquiry to Credit Control in the first place.

As to the second issue, McIvor appealed the district court’s determination that the communication between Credit Control and TransUnion was not a communication “in connection with the collection of any debt.”  This was a case of first impression for the Eighth Circuit – which had not yet defined that phrase.  The Eighth Circuit looked favorably upon and adopted case law from the third, Sixth and Seventh Circuits, ultimately holding that the phrase was intended to encompass more than letters from a debt collector to a consumer demanding payment.  Under this case law, to be a communication in connection with the collection of any debt, an “animating purpose of the communication must be to induce payment by the debtor.” 

The Eighth Circuit explained that a communication between a debt collector and a consumer reporting agency certainly could be “in connection” with debt collection in certain cases.  For example, when a debt collector reports a debt it knows is disputed to a credit reporting agency, it engages in collection activity for purposes of the FDCPA.  Turning to the communication at issue in this case, however, the Eighth Circuit held that the “animating purpose” of Credit Control’s communication to TransUnion was to comply with the reinvestigation procedures required by FCRA rather than to induce payment from McIvor.  Accordingly, the Eighth Circuit affirmed the district court’s dismissal of McIvor’s complaint.