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 Fair Debt Collection Practices Act (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?