In Wood v. Sec. Credit Servs., LLC, No. 20-cv-02369, 2021 U.S. Dist. LEXIS 135926, at *5 (N.D. Ill. July 19, 2021), Judge Norgle denied summary judgment against a debt collector due to a question of fact regarding the debt collector’s knowledge of a dispute regarding the reporting of the debt. The District Court outlined the legal standards under 15 USC 1692e(8) in doing so.
Pursuant to the FDCPA, a “debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. It is a violation of the FDCPA for a debt collector to communicate or threaten 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.” 15 U.S.C. § 1692e(8) (“§ 1692e(8)”). “To prevail on this theory plaintiff must, of course, present undisputed evidence that defendant knew or should have known about the dispute letters.” Irvin v. Nationwide Credit & Collection, Inc., No. 18 C 2945, 2019 U.S. Dist. LEXIS 158167, 2019 WL 4450503, at *3 (N.D. Ill. Sept. 17, 2019) (denying Plaintiff’s summary judgment motion despite that dispute letter was received by a fax machine, because there was “no evidence that anyone at defendant used that machine or viewed the faxes,” and therefore a material fact was in dispute). The ‘”knows or should know’ standard of § 1692e(8) ‘requires no notification by the consumer… and instead, depends solely on the debt collector’s knowledge that a debt is disputed, regardless of how that knowledge is acquired.'” Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 347 (7th Cir. 2018) (quoting Brady v. Credit Recovery Co., Inc., 160 F.3d 64, 67 (1st Cir. 1998)). . . .Debt collectors have a duty to disclose the disputed nature of a debt even if the debt has been investigated and been determined to be valid and accurate. “Section 1692e(8) does not require an individual’s dispute be valid or even reasonable. Instead, the plaintiff must simply make clear that he or she disputes the debt,” at which point a debt collector is bound by § 1692e(8). Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 347 (7th Cir. 2018) (citing DeKoven v. Plaza Assocs., 599 F.3d 578, 582 (7th Cir. 2010)). “[A] consumer can dispute a debt for no reason at all.” DeKoven, 599 F.3d at 582 (internal quotations omitted). The Seventh Circuit has made clear that if a debt collector who purchases debts obtains actual knowledge that a debt is in dispute, and the debt collector reports the debt without communicating that the debt is disputed, then the debt collector will be liable for violating the FDCPA. Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 342 (7th Cir. 2018) (granting Plaintiffs’ motion for summary judgment). . . .The present case is different, however, because Plaintiff does not allege that he or his lawyers told Defendant about the dispute, and there is no evidence that SCS had actual knowledge of the dispute. PenFed also never provided notice of the dispute to SCS; it is undisputed that SCS did not receive copies of Plaintiff’s dispute letters nor any historic credit reporting information from PenFed. Instead, Plaintiff here relies on the argument that Defendant should have known that the debt was disputed and that its credit reporting was false. 15 U.S.C.A. § 1692e(8). That is the crux of this motion—whether Defendant should have known that its reporting, which failed to include that the Debt was disputed, was false. Plaintiff argues that even if Defendant lacked actual knowledge of the dispute of the Debt, PenFed had actual knowledge, and PenFed’s knowledge should be imputed to Defendant via the sale of the Debt. The Court disagrees. As Defendant states, courts do not impute creditors’ knowledge to debt collectors as a matter of law. “A distinction between creditors and debt collectors is fundamental to the FDCPA, which does not regulate creditors’ activities at all. Courts do not impute to debt collectors other information that may be in creditors’ files.” Randolph v. IMBS, Inc., 368 F.3d 726, 729 (7th Cir. 2004) (noting that the “statute asks what the debt collector knows, not what the creditors knows … Knowledge may be imputed to agents, but debt collectors are independent contractors.”) (emphasis in original); Huebner v. Midland Credit Mgmt., Inc., No. 14 CIV. 6046 (BMC), 2016 U.S. Dist. LEXIS 73211, 2016 WL 3172789, at *6 (E.D.N.Y. June 6, 2016), aff’d, 897 F.3d 42 (2d Cir. 2018) (despite that Defendant debt collector bought the debt from Verizon, the creditor, “there is no reason that plaintiff’s prior dispute of the debt with Verizon’s debt collectors should have been known to [Defendant debt collector].”).