The United States Court of Appeals for the Seventh Circuit recently affirmed a lower court decision finding that a debt collector’s verification and investigation of a consumer’s disputes through its review of records obtained from the creditor was both satisfactory under the Fair Debt Collection Practices Act and reasonable under the Fair Credit Reporting Act. The case is Deborah Walton v. EOS CCA, No. 17-3040 (7th Cir. Mar. 21, 2018).

Originally filed in the Southern District of Indiana in 2015, this matter arose out of a debt consumer plaintiff Deborah Walton owed to AT&T. After notifying Walton of her delinquency, AT&T assigned or sold the debt to EOS for collection. However, the records AT&T transferred to EOS contained the wrong account number for Walton’s debt.

EOS subsequently mailed Walton a collection letter in an attempt to collect the debt. Walton recognized the inaccurate account number and disputed the debt with EOS over the phone and by letter. EOS confirmed the account information through a review of the records it received from AT&T and sent Walton a letter that verified that the information included in its debt collection letter was accurate. Walton alleges EOS’ review of the account documents without specifically verifying the underlying debt with AT&T was a violation of the FDCPA.

Following Walton’s dispute, EOS reported Walton’s debt to TransUnion and Experian with a notation that the debt was disputed. Walton then disputed EOS’ reporting of the debt with these entities. The reports generated by the credit reporting agencies for EOS stated that Walton claimed the account was not hers. Again, EOS reviewed its internal records and verified Walton’s debt. Walton disputed the debt a second time, this time claiming the account number associated with the debt was inaccurate. Upon receipt of this dispute, EOS requested deletion of the credit reports at issue. Walton alleges EOS’ investigation of her disputes was not reasonable under the FCRA. 

The district court found that EOS satisfied its legal obligations under the FDCPA and FCRA in reviewing Walton’s disputes and granted EOS’ motion for summary judgment. Walton appealed and the Seventh Circuit affirmed the lower court’s findings. In doing so, the Court followed the Fourth and Ninth circuits with regards to Walton’s FDCPA claim and found that a debt collector is only required to verify that the amount of debt and debtor information in its collection communications is the same information the creditor claims is owed. The debt collector is not required to investigate whether the obligation the creditor claims is owed is valid in itself. Rather, the debt collector must simply provide the consumer with enough information to dispute the payment obligation, which the Court found EOS did.

Regarding Walton’s FCRA claims, the Court found EOS’ investigations of Walton’s credit disputes reasonable based on the information included in the credit agencies’ dispute reports. Specifically, the Court found Walton’s first dispute, which stated the AT&T account did not belong to her, provided so little information that EOS’ review of its internal information alone was reasonable. The Court also found that once EOS learned that Walton disputed the debt based on the inaccurate account number, it took the reasonable and appropriate action to request deletion of its reporting of Walton’s debt.

The Seventh Circuit’s decision provides greater clarity regarding a debt collector’s review and investigation obligations when it receives a dispute from a consumer or a credit reporting agency. We will continue to monitor and report on developments involving debt collectors’ responsibilities under the FDCPA and FCRA.