Decision Dismissing FCRA and FDCPA Claims Offers Primer on What Needed to Satisfy Federal Pleading Standards
A recent, brief opinion provides us with an overview of the elements required to sustain claims under the Fair Credit Reporting Act (“FCRA”) and Fair Debt Collection Practices Act (“FDCPA”). Whether you are developing new expertise or honing your craft, this case provides a convenient review of the elements required for causes of action under both statutes, reminding plaintiffs what must be alleged and guiding defendants as to what to look for while drafting a motion to dismiss.
In Scalercio-Isenberg v. Select Portfolio Servicing, No. 20-cv-4501, 2021 U.S. Dist. LEXIS 15117 (D.N.J. Jan. 27, 2021), the court granted a motion to dismiss claims against a mortgage servicer. The plaintiff alleged that the defendant, its mortgage servicer, violated federal and state credit reporting statutes. The plaintiff alleged that although it regularly made its mortgage payments on time, the defendant held the payments in a “suspense” account, falsely reported late payments to consumer reporting agencies, and opened an unauthorized escrow account in the plaintiff’s name.
The FCRA requires that the furnisher of information to a consumer reporting agency provide only accurate information. To help enforce this, the FCRA permits a cause of action against a furnisher of information. This claim requires: (1) the plaintiff notify the consumer reporting agency of disputed information; (2) the consumer reporting agency then notifies the furnisher of the disputed information; and (3) the furnisher fails to investigate and modify the disputed information.
The court found the plaintiff’s FCRA claim failed because he did not allege the second element. The court determined that the defendant’s duty, as the furnisher of allegedly disputed information, to investigate was not triggered because the plaintiff did not allege that the consumer reporting agency notified the defendant of the disputed information. Instead, the plaintiff alleged it directly notified the consumer reporting agency and the defendant. The plaintiff’s notice did not trigger the defendant’s duty to investigate.
Second, the plaintiff alleged the defendant violated the FDCPA by sending “monthly mortgage debt collection statements” that contained “false, erroneous information” and intentionally omitted the plaintiff’s allegedly timely payments.
The FDCPA regulates how a debt collector may collect debts. The FDCPA applies to debt collectors, which the statute defines as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). As may be expected, the meaning of “debt collector” is often disputed, and Scalercio was no exception.
The court found the plaintiff’s FDCPA claim failed because the defendant was not a debt collection agency. The court noted the plaintiff did not allege the mortgage was in default when the defendant became its servicer, which was required for the defendant to be considered a debt collection agency under the FDCPA.
Overall, Scalercio is a short but sweet opinion that reminds us of common pleading issues that may emerge when litigating claims under the FCRA or FDCPA.