In Walton v. EOS CCA, 17-CV-3040, 2018 WL 1417495 (7th Cir. 2018), the 7th Circuit clarified the verification and investigation requirements for a collection agency when a consumer disputes a debt. In its March 21, 2018 decision, the court found that EOS’s investigation into the consumer’s dispute was sufficient and granted summary judgment for the agency.
Read the decision here.
Factual and Procedural Background
Walton, the plaintiff in this matter, failed to pay a $268.47 bill on her AT&T account. Her AT&T account number was 119864170. Walton’s failure to pay led AT&T to place her account with EOS for collection. Due to an error in AT&T’s records, the digits of Walton’s account number got mixed up when sent to EOS. As a result, the account number received by EOS for Walton’s account was 864119170.
Walton disputed the debt three times. First, she sent a letter to EOS stating that she does not owe money to AT&T. Second, she filed a dispute with the credit reporting agencies where she stated the account did not belong to her. Third, she filed another dispute with the credit reporting agencies disputing the account number on her credit report.
After EOS received the first letter, it verified the records it received from AT&T against Walton’s personal information and concluded that the account did indeed belong to her. Similarly, after receiving the first credit report dispute, EOS again checked its records and confirmed that Walton’s information matches that which EOS received from AT&T. After receiving the second credit report dispute regarding the account number, EOS asked the credit reporting agencies to delete the trade line.
Walton filed a suit against EOS with two allegations: First, that a violation of the FDCPA occurred when EOS did not verify her information with the creditor; and second, that a violation of the FCRA occurred by EOS failing to reasonably investigate the disputes.
The district court entered summary judgment in favor of EOS at the recommendation of the magistrate. Walton then appealed.
The 7th Circuit found that EOS did, indeed, properly verify the debt. The court adopted the view of other Circuits stating that a debt collector need only confirm the amount being demanded is what the creditor is claiming is owed. The court elaborated that the verification requirement “serves as a check on the debt collection agency, not the creditor.” Requiring a debt collector to investigate the validity of the amount owed would be “burdensome and significantly beyond the [FDCPA’s] purpose.”
Applying this to Walton’s case, the court found that EOS’s verification was sufficient in that EOS checked and confirmed that Walton’s personal identifying information (name, address, and social security number) matched the records it received from AT&T. Based on this, EOS reasonably verified Walton’s ownership of the account.
Likewise, the court found that such a check was reasonable for the reasonable investigation required by the FCRA. Walton’s first credit report dispute was bare of details and only stated that the debt did not belong to her. Based on this bare dispute, EOS again checked Walton’s information against the records received from AT&T and found that they matched, thus finding that the account belonged to Walton. This is sufficient, according to the court.
Upon receiving the second dispute regarding the account number, EOS asked the credit reporting agencies to delete the account from Walton’s credit reports, which is exactly what Walton requested.
Even though the decision did not provide much elaboration, its finding that the verification requirement applies to checking the debt collector’s records – and not verifying that the creditor’s records are correct – the 7th Circuit implied that debt collectors may rely on the information provided by creditors for the purposes of verifying a debt, at least in the context of ownership of an account.
Many times, debt collection agencies are at the mercy of the information provided by the creditors. Using the above case as an example, EOS had no way of knowing that the account number was incorrect based on the information it received from AT&T. Nor did Walton’s first two disputes put EOS on notice that the account number was incorrect, even though that is what Walton was attempting to say in the first place.
With this decision, the 7th Circuit provided collection agencies with a shield and puts a certain clarification standard on consumers when they dispute accounts. In effect, the decision put into writing that debt collectors are not mind readers. If the consumer sends a generic dispute that can be resolved with a quick investigation, then that is sufficient. A debt collector need not delve into a deeper investigation if the language of the consumer’s dispute did not indicate a need.