What constitutes a "dispute" sufficient to invoke your right to compel a creditor to notify the credit bureaus that a debt is indeed disputed?

Generally speaking, as a consumer debtor, you have a claim against any debt collector that knowingly communicates false information to the credit bureaus. But a debt collector has the additional obligation to communicate to the credit bureaus the disputed nature of any debt that it reports.

Fair Debt Collection Practices Act § 1692e(8) forbids:

"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."

My reading of this statute imposes the requirement to notify the credit bureaus of the disputed nature of any debt regardless of the factual support for the dispute, and regardless of the accuracy (or falsity) of the information being reported.

A respected member of the FDCPA defense bar, Tomio Narita, sees it differently. Mr. Narita's recent blog of June 12, 2012, points to cases where federal judges need to see "sufficient factual allegations supporting the finding that a debt collector knew or should have known that the debt amount as stated in the demand letter was false."

Mr. Narita discusses and argues that a "materiality" standard applies to this statute. For example, Mr. Narita pointed to a federal case that found no 1692e or 1692f violations where a collection complaint sought a correct amount but the breakdown contained false elements. Another federal court held, "if a statement would not mislead the unsophisticated consumer, it does not violate the FDCPA – even if it is false in some technical sense. (Wahl v. Midland Credit Mgmt., 556 F.3d 643, 646 (7th Cir. 2009). Mr. Narita takes these holdings and applies them to e(8) claims. Mr. Narita argues that collectors should not be liable for failing to communicate to the credit bureaus that a debt is disputed if 1) the amount reported to the credit bureau(s) is accurate; and 2) the consumer has not substantiated the dispute.

I disagree with this suggested, heightened burden.

I question the legal accuracy of Mr. Narita's assertion that "[t]he consumer must provide the collector with information showing they have a legitimate, good faith dispute concerning the amount of the debt as reported to the consumer reporting agencies." That requirement simply does not appear in the statute. Nor is there any reference to the qualitative sufficiency of the word "dispute." I've found cases that contradict that statement. For example, in leading FDCPA treatise by National Consumer Law Center, §5.5.11 reads, "[T]his provision does not give debt collectors the authority to determine unilaterally that a dispute lacks merit and not be reported." (See Hoffman v. Partners in Collections, Inc., 1993 WL 358158, N.D. Ill. Sept. 1993 (dispute need not be demonstrated as "valid" for protection to apply).

Furthermore, leading cases hold that a dispute need not even be made in writing. (See Brady v. Credit Recovery Co., 160 F.3d 64 (1st Cir. 1998) I.d. at 66. ("clearly, the ordinary usage of dispute does not contemplate a writing").

In short, Mr. Narita assumes that a concise dispute (such as "I dispute this") could (and perhaps should) be deemed "meritless" and the 1692e(8) requirement could essentially be ignored. Using his reasoning, who would determine which disputes are qualitatively sufficient to trigger a debt collector's requirement to notify the credit bureaus of the debt's disputed nature? The debt collector who has a completely adverse position?

Mr. Narita argues that since the Fair Credit Reporting Act ("FCRA") contains defenses grounded in meritless disputes, so should the FDCPA. But the two statutes are different with different standards and different purposes.

Although I disagree with Mr. Narita on this point of law, I would not want him defending any FDCPA case of mine. So be specific with your disputes and elaborate as to why the information about the debt is false.

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