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August 9, 2004.

NESTER KOHUT, Plaintiff,

The opinion of the court was delivered by: BLANCHE MANNING, District Judge


Plaintiff Nester Kohut believes that his credit report contains duplicate entries relating to a single debt and that the entries negatively impacted his credit rating. Defendant CCB is a collection agency which reported one of the allegedly duplicative debt listings to defendant TransUnion, a consumer credit reporting agency. According to Kohut, CCB wrongfully reported that debt and then TransUnion failed to ensure that Kohut's credit report reflected that the duplicate entries referred to the same debt.

Kohut's complaint, which is styled as a class action, asserts that TransUnion's actions violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., and that CCB's actions violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. The defendants have filed separate motions to dismiss pursuant to Fed.R. Civ. P. 12(b)(6). For the reasons set forth below, CCB's motion to dismiss Count I (15 U.S.C. §§ 1692e and 1692e(10)) is granted and TransUnion's motion to dismiss Count II (15 U.S.C. § 1681e) and Count III (15 U.S.C. § 1681i) is denied. I. Background

  The following facts are drawn from Kohut's complaint and are accepted as true for the purposes of the motions to dismiss.*fn1 Kohut was distressed by duplicate entries on his credit report. He thus sued TransUnion, a consumer credit reporting agency, and CCB Credit Services, a collection agency that collects debts within the meaning of the FDCPA.

  More specifically, Kohut's displeasure stemmed from the fact that TransUnion permits the reporting of more than one tradeline for a single debt without clear disclosure that both tradelines refer to the same debt.*fn2 This practice is detrimental to consumers as credit scoring systems assess the total number of tradelines when calculating credit scores. Pursuant to its policy regarding double tradeline listings, TransUnion reported two tradelines for the same debt allegedly owed by Kohut. Kohut then unsuccessfully tried to get the duplicate entry removed.

  Debt collectors such as CCB are familiar with the practice of double reporting. They engage in their own version of double-reporting by reporting debts that have already been reported by the original creditor in order to magnify the effect of the debt on the consumer. With respect to Kohut, CCB intentionally reported a debt to TransUnion despite the fact that it knew that the original creditor had also reported this debt and that the debt was thus already listed on Kohut's credit report. This caused Kohut to feel pressured to pay the total amount requested, even though the debts were disputed, so he could clear his credit report. In Count I, Kohut asserts that CCB violated the FDCPA, 15 U.S.C. §§ 1692e and 1692e(10) by reporting a debt to TransUnion even though it knew that the debt had already been reported and that the likely effect of its actions would be a double listing of the same debt. In Count II, he contends that TransUnion violated the FCRA by failing to "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates," 15 U.S.C. § 1681e, by not taking reasonable measures to prevent duplicate listings of the same debt and making it appear that the duplicate listings were different debts. In Count III, Kohut alleges that TransUnion violated 15 U.S.C. § 1681i of the FCRA, which sets forth procedures for credit reporting agencies to follow when a consumer disputes a debt. Counts I and II are styled as class action claims, while Count III is brought by Kohut individually.

  II. Discussion

  A. Standard on 12(b)(6) Motion to Dismiss

  In ruling on a motion to dismiss pursuant to Fed.R. Civ. P. 12(b)(6), the court must assume the truth of all facts alleged in the complaint, construing the allegations liberally and viewing them in the light most favorable to the plaintiff. See, e.g., McMath v. City of Gary, 976 F.2d 1026, 1031 (7th Cir. 1992). Dismissal is properly granted only if it is clear that no set of facts which the plaintiff could prove consistent with the pleadings would entitle the plaintiff to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). However, the court is neither bound by the plaintiff's legal characterization of the facts, nor required to ignore facts set forth in the complaint that undermine the plaintiff's claims. Scott v. O'Grady, 975 F.2d 366, 368 (7th Cir. 1992). B. CCB — FDCPA

  Sections 1692e and 1692e(10) of the FDCPA both prohibit debt collectors from using false, deceptive, or misleading means to collect a debt.*fn3 According to Kohut, CCB violated §§ 1692e and 1692e(10) by reporting a debt to TransUnion when the original creditor (Household Bank) had already reported that debt. Specifically, Kohut stresses that his complaint alleges that CCB had a copy of his credit report which listed the Household debt so CCB knew that its reporting of the debt it had purchased from Household would cause a misleading duplicate listing. Kohut also suggests that CCB intentionally phrased its reporting of the Household debt in a misleading way to lead a reader of the credit report into thinking the second tradeline was for a different debt, thereby magnifying the debt's negative effect on Kohut's credit report.

  The court's analysis as to CCB begins and ends with CCB's argument that Kohut's claim under §§ 1692e and 1692e(10) must fail because Kohut did not allege that CCB's report to TransUnion was inaccurate. The parties have not cited, and the court has been unable to locate, any factually similar cases where a plaintiff raised a double-reporting argument under the FDCPA.*fn4 Moreover, most of the cases brought under §§ 1692e and 1692e(10) involve the phrasing of dunning letters and thus are not helpful. See e.g., Boyd v. Wexler, 275 F.3d 642, 644 (7th Cir. 2001). The court will, therefore, use the time-honored principles of statutory interpretation to decide if CCB's actions violate §§ 1692e and 1692e(10) of the FDCPA.

  The parties agree that CCB's report was accurate.*fn5 This sounds the death knell for Kohut's FDCPA act claim against CCB because it is not false, deceptive, or misleading for CCB to tell a consumer credit reporting agency that it attempted to collect a debt that Kohut concedes is valid even if that leads to two records relating to the same debt in Kohut's credit report. As noted above, Household reported Kohut's debt after Kohut defaulted on a loan. Household then sold the debt to CCB, who also unsuccessfully tried to collect the debt. CCB, like Household, then also reported Kohut as delinquent.

  Because Kohut does not claim that the information that CCB reported was itself inaccurate (instead, he claims that the effect of that report — the double entry — was inaccurate), it is not "false, deceptive, or misleading" to report that CCB was unable to collect a valid debt. This is true even if CCB knew that its report would lead to a duplicate entry for the same debt as it is not "false, deceptive, or misleading" to report that a consumer failed to pay a debt after it went to collection when that consumer also failed to pay the debt before it went to collection. Simply put, the FDCPA's proscription against "false, deceptive, or misleading" collection tactics does not cover CCB's reporting of its failure to collect a valid debt.

  It is true that CCB's attempt to collect the debt and its subsequent report to TransUnion after it failed to do so may have the practical effect of exerting additional pressure on Kohut to pay the debt. But the pressure caused by two reports of delinquency (pre- and post-collection) is not "false, deceptive, or misleading" under 1692e and 1692e(10) of the FDCPA because it arises out of the reporting of a valid debt. Indeed, if Kohut's "it's illegal for a collection agency to take action which amounts to turning the thumbscrews" argument was tenable, collection agencies would never be able to report delinquent accounts because they would thus necessarily negatively impact consumers' credit ratings. Sections 1692e and 1692e(10) of ...

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