In Edeh v. Midland Credit Management, Inc. (D. Minn. 2010) , Judge Schiltz found that a debt collector does not violate the FDCPA by reporting an account to the Credit Reporting Agencies after a debtor demands validation without first validating the debt, explaining
The Court rejects Edeh’s argument that a debt collector who, before verifying a disputed debt to a consumer, verifies that debt to a CRA in response to a notification received from the CRA engages in “collection of the debt” in violation of § 1692g(b). No debt collector is required to report a debt to a CRA before verifying that debt to a consumer — and thus, as the Court held above, it is reasonable to view such a practice as a species of debt collection prohibited under § 1692g(b). But a debt collector is required by the FCRA to verify a debt to a CRA after the CRA notifies the debt collector that the debt is in dispute. It makes little sense to view such a verification as a prohibited attempt at debt collection. The debt collector is acting not on its own initiative, but in response to a notice sent by the CRA, and the debt collector is responding to that notice not to collect a debt, but to avoid violating the FCRA.
Judge Schiltz also rejected the extra-territorial application of the Rosenthal Act to Minnesota consumers contacted by California debt collectors. Judge Schiltz found a question of fact regarding the Plaintiff’s claim under the TCPA, explaining:
Midland’s call to Edeh’s cellular phone was permissible only if it was made “with [Edeh’s] prior express consent.” 47 U.S.C. § 227(b)(1)(A)(iii) (emphasis added). “Express” means “explicit,” not, as Midland seems to think, “implicit.” Midland was not permitted to make an automated call to Edeh’s cellular phone unless Edeh had previously said to Midland (or at least to Midland’s predecessor in interest) something like this: “I give you permission to use an automatic telephone dialing system to call my cellular phone.” Midland has no evidence that Edeh gave such express consent. In fact, uncontroverted evidence, in the form of Edeh’s affidavit, shows that Edeh did not consent to receive automated calls on his cellular phone. Edeh Aff. ¶ 10 [Docket No. 41-3]. The Court therefore overrules Midland’s objection to the R&R as it relates to TCPA liability.
Finally, Judge Schiltz held that the Plaintiff could not state a claim against the debt collector under FCRA for the debt collector’s re-investigation without first proving that the credit reporting was inaccurate, explaining:
Midland points out that Edeh admits that he owes the full amount of the debt that Midland verified to the CRAs. According to Midland, an investigation that results in the furnisher verifying accurate information about the debt is necessarily “reasonable” for purposes of § 1681s-2(b). Midland S.J. Reply at 3; Midland Obj. R&R at 3. As best as the Court can determine, Midland’s argument has been addressed by only one circuit. In Chiang v. Verizon New England Inc., the First Circuit held that “a § 1681s-2(b) claim requires plaintiff to show actual inaccuracies that a furnisher’s objectively reasonable investigation would have been able to discover.” 595 F.3d 26, 29-30 (1st Cir. 2010). The Chiang court relied heavily on DeAndrade v. Trans Union LLC, in which the First Circuit, joining the majority of federal courts that have addressed the question, held that a consumer bringing a claim under a different provision of the FCRA — § 1681i(a) — must prove “that the reported information was in fact inaccurate.” 523 F.3d 61, 67 (1st Cir. 2008); see also Kuehling v. Trans Union LLC, 137 Fed. App’x. 904, 908 (7th Cir. 2005) (“Without evidence of some inaccuracy in the Trans Union report or reinvestigation, Kuehling cannot establish that Trans Union violated the FCRA — either § 1681e(b) or § 1681i(a)(1)(A).” (emphasis in original)); Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1160 (11th Cir. 1991) (the determinative question for liability was “whether the credit reporting agency could have discovered an error in a particular report through a reasonable investigation.”). Section 1681i(a) requires that, when a consumer notifies a CRA of a dispute regarding “the completeness or accuracy of any item of information contained in [the] consumer’s file,” the CRA must “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate . . . .” 15 U.S.C. § 1681i(a)(1)(A). ¶ In Chiang, the First Circuit held that, like consumers bringing claims against CRAs for failure to conduct a reasonable reinvestigation under § 1681i(a), consumers bringing claims against furnishers for failure to conduct a reasonable investigation under § 1681s-2(b) must show that the information being challenged was inaccurate. The First Circuit reasoned that it would make little sense to require more of § 1681i(a) plaintiffs than § 1681s-2(b) plaintiffs: “Given the considerable overlap between a CRA’s responsibility to reinvestigate and a furnisher’s duties under § 1681s-2(b), it would be inconsistent for plaintiffs to bear a weightier burden in suits against a CRA under § 1681i(a) than in suits against furnishers under § 1681s-2(b).” 595 F.3d at 37. In addition, the First Circuit held that allowing plaintiffs to recover under either § 1681i(a) or § 1681s-2(b) without showing that the challenged information was inaccurate would be inconsistent with the text and purpose of the FCRA. As the First Circuit said, “‘The FCRA is intended to protect consumers against the compilation and dissemination of inaccurate credit information.’” 595 F.3d at 37-38 (quoting DeAndrade, 523 F.3d at 67) (emphasis in original). Congress did not impose the obligation on furnishers to conduct reasonable investigations under § 1681s-2(b), or on CRAs to conduct reasonable reinvestigations under § 1681i(a), because reasonable investigations in and of themselves benefit consumers. Rather, Congress made clear in the statute that the purpose of the investigation (or reinvestigation) was to identify — and protect the consumer from — information that was incomplete or inaccurate. If the CRA or furnisher conducts an investigation, that investigation results in verification of the completeness and accuracy of the challenged information, and the challenged information is, in fact, complete and accurate, then neither § 1681i(a) nor § 1681s-2(b) has been violated. 595 F.3d at 37-38. ¶ Finally, as the First Circuit pointed out, “it is ‘difficult to see how a plaintiff could prevail on a claim for damages’ based on an unreasonable investigation of disputed data ‘without a showing that the disputed information . . . was, in fact, inaccurate.’” Id. at 38 (quoting DeAndrade, 523 F.3d at 67). In this case, for example, there is no question that the information about Edeh’s debt that was verified by Midland was complete and accurate. Edeh has not even hinted as to how he was harmed by Midland giving truthful information to the CRAs. ¶ This Court agrees with the First Circuit and holds that, because Edeh cannot show that the information about his debt that was verified by Midland was inaccurate, Edeh cannot recover from Midland under § 1681s-2(b). The Court sustains Midland’s objection to the R&R’s recommendation regarding Edeh’s FCRA claim. Midland is entitled to summary judgment on Count V.