Wednesday, July 8, 2015

FYI: 8th Cir Confirms Collection Action Not "Adverse Action" Under FCRA, No Notice to Debtor Required for Collection Credit Report Pull

The U.S. Court of Appeals for the Eighth Circuit recently affirmed the dismissal of a debtor’s federal Fair Debt Collection Practices Act (“FDCPA”), federal Fair Credit Reporting Act (“FCRA”), and state law claims where a debt collector pulled the debtor’s credit report and served a garnishment summons after the debtor allegedly had sent a cease-and-desist letter to the debt collector.


In so ruling, the Court confirmed that:  (1) a debt collector may pull a debtor’s credit report for collection purposes, and that the debt collector did not need to notify the debtor before reviewing such information; and  (2) garnishment is not an “adverse action” under FCRA.


A copy of the opinion is available at:


The defendant debt collector served the debtor with a garnishment summons in April 2014.  The debtor returned the standardized Exemption Form included with the garnishment summons claiming without explanation that the garnished money was protected. 


Instead, in the Exemption Form, the debtor asserted that the source of the money in his bank account being garnished was “[his] butt” and that he was entitled to death benefits because he “died and payed [his] death with poop money.”


An attorney for the debtor sent a letter requesting the debt collector to honor a prior cease-and-desist.  The plaintiff debtor, a former debt collector, alleged he sent a cease-and-desist letter to the debt collector in March 2011, but the debt collector denied it received any letter, the plaintiff debtor never produced the letter in the district court, and there was no letter in the record on appeal.


The debtor then sued the law firm under various sections of the FDCPA, FCRA, and state laws.  The lower court dismissed the complaint. 


On appeal, the debtor argued (1) the debt collector improperly pulled his credit report twice despite his alleged cease-and-desist letter; (2) the debt collector failed to send the debtor notice of its use or viewing of his credit report; (3) the garnishment summons constituted an “adverse action” requiring notice to the debtor; and (4) the district court incorrectly dismissed his state law claim alleging invasion of privacy.


The Eighth Circuit first found there was no evidence the debtor requested the debt collector to cease its communications with him.  The Court also held that, even if there were a cease and desist letter as alleged, a debt collector may communicate with the debtor “to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor” pursuant to 15 U.S.C. § 1692c(c)(2), which the Court held was exactly what the garnishment summons at issue was.


Second, the Eighth Circuit also held that the debt collector could request the debtor’s credit report for use “in connection with a credit transaction involving the consumer on whom the information is to be furnishing and involving…review or collection of an account of, the consumer” pursuant to 15 U.S.C. § 1681b(a)(3)(A), and that the debt collector did not need to notify the debtor before reviewing such information.


Third, the Eighth Circuit held that service of a garnishment summons is not an “adverse action” requiring notice to the consumer pursuant to the FCRA’s notice requirement under 15 U.S.C. § 1681m(a)(1) or the statutory definition of “adverse action” under 15 U.S.C. § 1681a(k).  The Court did not note whether the debt collector obtained the information regarding the plaintiff debtor’s bank account being garnished through the use of the credit report pulls.


Lastly, the Eighth Circuit held that, although Minnesota recognizes an invasion of privacy cause of action for “intrusion upon seclusion” as stated in Lake v. Wal-Mart Stores, Inc., 582 N.W.2d 231, 235 (Minn. 1998), a plaintiff must allege a legitimate expectation of privacy in the secluded matter and the intrusion must be “highly offensive to the ordinary reasonable [person]” pursuant to Swarthout v. Mut. Serv. Life Ins. Co., 632 N.W.2d 741, 744-745 (Minn. Ct. App. 2001). 


The Court held that collection of bank account information is not “highly offensive” and is in fact authorized by Minnesota Statute § 550.011.  The law firm could therefore request the debtor’s banking information.


Accordingly, the Eighth Circuit affirmed the dismissal of the debtor’s FDCPA, FCRA, and state laws claims. 





Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874


Admitted to practice law in Illinois



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