7th Circuit affirms for ruling collections company in credit information dispute

A collections company’s compliance procedures were reasonable and met the requirements of the Fair Credit Reporting Act in its pursuit of collecting from an Indiana woman, the 7th Circuit Court of Appeals has ruled.

Brooke Persinger’s debts were discharged after she and her husband jointly filed for bankruptcy in 2017. The discharge order listed Brooke Persinger’s four former names, including Brooke Casey.

Following the discharge order, the bankruptcy court notified all known creditors, including Southwest Credit Systems L.P., of its ruling.

In January 2018, Southwest received a delinquent account in Persinger’s former name, Brooke Casey, for a debt owed to Viasat Residential. Although delinquent since 2014, the debt was not listed on Persinger’s 2017 bankruptcy petition.

As a result, Southwest ordered a bankruptcy scrub and proceeded in its collection efforts after LexisNexis did not return immediate results. It acquired a type of credit information called her “propensity‐to‐pay score.”

But several months later, LexisNexis updated Persinger’s account with information about her 2017 bankruptcy, and Southwest closed the account.

Learning of its access to her information, Persinger subsequently sued Southwest in a class action, alleging it had secured the information without a permissible purpose and in violation of the Fair Credit Reporting Act.

However, the U.S. District Court for the Southern District of Indiana granted summary judgment to Southwest, which the 7th Circuit affirmed in Brooke Persinger v. Southwest Credit Systems, L.P., 21-1037.

The appellate court first ruled that Persinger had standing to sue on her allegations that Southwest invaded her privacy when it reviewed her credit information and to seek damages under 15 U.S.C. §§ 1681n–o.

“It is enough to say that the harm alleged in her complaint resembles the harm associated with intrusion upon seclusion,” Circuit Judge Michael Brennan wrote. “Thus, it is a concrete injury.”

However, the court also concluded Persinger failed to proffer evidence showing Southwest impermissibly accessed her propensity‐to‐pay score causing her pecuniary or nonpecuniary harm.

“In short, Persinger’s testimony not only failed to support her claim for actual damages but also disproved it. With respect to negligence, then, summary judgment for Southwest was appropriate because no reasonable juror could conclude that the inquiry into Persinger’s propensity‐to‐pay score resulted in actual damages,” Brennan wrote.

Addressing whether Southwest willfully violated the FCRA, the 7th Circuit concluded it did not.

“To be sure, Persinger’s debt was discharged by the time Southwest obtained her propensity‐to‐pay score — for this, there was no permissible purpose under the FCRA,” the court held. “But Southwest lacked actual knowledge of the bankruptcy, and it did not recklessly disregard the possibility that debt had been discharged.  The evidence shows that it had a reasonable basis for relying on its procedures.”

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