Goodman v. Discover Financial Services, LLC

Background

Pro se plaintiff Aaron Goodman sued Discover Financial Services, LLC under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). The opinion notes that Discover disputed whether it was the proper defendant and asserted that Discover Bank was the proper defendant, but the motion was filed on behalf of the named defendant and stated that the arguments applied equally to both entities.

According to the Complaint, Goodman learned in August 2018 that Discover was reporting an alleged debt to consumer reporting agencies. Goodman said he did not recognize Discover as a creditor and sent a notice disputing the debt, demanding validation and asking that the credit bureaus be told that the debt was disputed. He alleged that Discover did not respond, later closed the account, and reported it as “bad debt collections, delinquent, overlimit and as charged-off.” He further alleged that Discover did not validate the debt, mark it as disputed, or correct the information reported to Experian Information Solutions, Inc. In 2021, a national banking association allegedly denied Goodman’s credit application based on negative information Discover reported to Experian.

FDCPA Claims

Discover moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court dismissed Counts I through III because the Complaint did not allege sufficient non-conclusory facts showing that Discover was a “debt collector” subject to the FDCPA, was engaged in debt-collection activity, or used a false name in connection with that activity. The Complaint instead referred to Discover as a creditor. The court rejected Goodman’s argument that Discover had the burden of proving it was a creditor rather than a debt collector at the motion-to-dismiss stage.

FCRA Claims

Goodman voluntarily dismissed Counts IV and V in his opposition. The court addressed the remaining claim, Count VI, under Section 1681s-2(b)(1) of the FCRA. To the extent the Complaint relied on Section 1681s-2(a), the court held that subsection does not create a private right of action, meaning a private plaintiff cannot use it as the basis for a lawsuit.

Construing the Complaint as asserting a claim under Section 1681s-2(b), the court held that the allegations were insufficient. That provision concerns a furnisher’s duties after a consumer disputes information through a consumer reporting agency. The Complaint alleged that Goodman contacted Discover, but it did not allege that Goodman notified a consumer reporting agency of the discrepancy and that the agency then notified Discover. The court also declined to treat statements in Goodman’s opposition as amendments to the Complaint. The opinion notes that Goodman still had not alleged that Experian notified Discover.

Disposition and Opportunity to Amend

The court granted Discover’s motion to dismiss. It did not state that the dismissal was with or without prejudice. The court allowed Goodman to seek leave to replead Counts I through III and Count VI by submitting a proposed First Amended Complaint with a letter explaining how the identified deficiencies would be addressed, no later than June 24, 2022. The court directed the Clerk of Court to close the motion at Docket No. 24.