It Was a Reasonable Investigation Just See the Police Officer’s Comment

Author: Lori Quinn

Anyone who has been met with a Fair Credit Reporting Act against furnisher of credit information case knows that it turns on the “reasonableness” of the investigation. After a parade of letters and disputes concerning a debt for a one-way plane ticket purchased on a credit card that Woods claimed was the result of identity theft – a claim rejected by the original creditor validated and, in turn, LVNV’s collection agent Resurgent validated the debt, Wood obtained a police report. The extensive record of letters, disputes and, critically, an Automated Consumer Dispute Verification (“ACDV”), which included a copy of the police report noting that the original creditor validated the account were analyzed by the Court.

Woods sued Resurgent and LVNV for violations of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The District Court granted defendants’ motion for summary judgment and Woods appealed. In Woods v LVNV Funding, LLC, No. 21-1981, 2022 WL 594277 (7th Cir. Feb. 28, 2022), the 7th Circuit affirmed the District Court’s granting LVNV and Resurgent’s motion for summary judgment. Woods argued that Resurgent’s investigation of the dispute could have gone further, and that, as a result, the investigation was not “reasonable”. Woods suggests that a reasonable investigation would have included subpoenaing the airline to identify the person who took the flight to track down the identity thief or confirm the validity of the debt. In other words, Woods argued that defendants’ investigation was not reasonable because it was not exhaustive. The 7th Circuit found this to be outside Congress’ intent stating that it was “…implausible that Congress, in drafting a consumer protection statute like the FDCPA, would have sent consumers on such a wild goose chase.”

In a classic rejection of the FCRA requiring a “perfect” investigation, the 7th Circuit confirmed Section 1681-s(2)(b) requires only a reasonable investigation dependent on the nature of the dispute. The 7th Circuit noted that, even though the notice of a dispute (the ACDV), included a police report, the report advised that the investigating officer noted that the creditor concluded that the debt was not the result of identity theft or fraud. Therefore, Resurgent was within its rights to rely on those representations in the ACDV. Ultimately, Resurgent’s issuance of similar letters to Woods, concluding that Woods was responsible for the debt and Resurgent’s repeated (and unanswered) requests for Woods to provide information to assist in its investigation, was part and parcel of a reasonable investigation. Be warned, however, the 7th Circuit concluded their opinion but stating this decision provides “no license for furnishers to offload their § 1681s-2(b)(1)(A) investigation obligations to consumers by spamming them with request for additional information.”

Finally, Woods argued that Resurgent’s letters were false representations or a deceptive means to collect a debt because the original creditor later found he did not owe the debt. The 7th Circuit was unconvinced, noting there is a difference between “literal falsity” and “false” under the 1692e of the FDCPA. The 7th Circuit found that “a statement isn’t false unless it would confuse the unsophisticated consumer and that Woods’ appeal is based on the applicable statutory language in 1692e”. Despite the strict liability of the FDCPA, Woods failed to explain why Resurgent’s letters were materially false.

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