Teri Lynn Hinkle v. Midland Credit Management, Inc.
827 F.3d 1295
| 11th Cir. | 2016Background
- Hinkle discovered two charged-off accounts (GE/Meijer and T-Mobile) on her credit reports that Midland had purchased as-is from downstream debt buyers and attributed to variations of her name.
- Midland purchased the accounts without account-level documentation and relied on electronic data files from sellers (AIS, DRS); purchase agreements included limited warranties and offered assistance in obtaining documentation post-closing.
- Hinkle disputed the accounts with the CRAs and directly with Midland, asserting mistaken identity/fraud; CRAs forwarded dispute notices instructing Midland to verify identifying data.
- Midland’s investigative response consisted mainly of comparing CRA data to its internal electronic records and sending letters to Hinkle asking for supporting documentation; Midland did not obtain account-level documents from sellers or original creditors.
- The district court granted summary judgment for Midland on FCRA and FDCPA claims; on appeal the Eleventh Circuit reversed as to Hinkle’s § 1681s-2(b) claim (FCRA) and affirmed on other claims, finding triable issues about the reasonableness and potential willfulness of Midland’s investigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a furnisher’s § 1681s-2(b) investigation must go beyond matching CRA data to its internal electronic files when identity is disputed | Hinkle: Down-the-line buyers must seek account-level documentation or otherwise obtain evidence establishing identity before reporting verification | Midland: Comparing CRA data to its own records and asking the consumer for documentation was sufficient; burden can shift to consumer | Reversed summary judgment: a reasonable jury could find Midland’s cursory check unreasonable; case remanded on § 1681s-2(b) claim |
| Whether Midland could report disputed accounts as "verified" based solely on its electronic data files | Hinkle: Electronic files from prior buyers were insufficient to verify identity | Midland: Internal records matched CRA data and thus verified the accounts | Jury question: verification requires sufficient evidence; reliance on uncorroborated downstream data may be unreasonable |
| Whether Midland could condition further investigation on Hinkle’s production of documentation | Hinkle: Midland, not the consumer, bears the burden to reasonably investigate; conditioning was improper | Midland: Consumer’s failure to provide a police report/affidavit justified stopping investigation | Triable issue: burden-shifting not allowed as a per se rule; letter that merely requested (not required) documentation not dispositive |
| Whether Midland acted willfully (for purposes of statutory damages) | Hinkle: Midland knowingly or recklessly reported unverified debts as verified | Midland: Investigation procedures were adequate; no willfulness | Triable issue: jury could infer willfulness or reckless system design that produced perfunctory verification |
Key Cases Cited
- Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151 (11th Cir. 1991) (CRA duty to make reasonable reinvestigation)
- Chiang v. Verizon New England, Inc., 595 F.3d 26 (1st Cir. 2010) (reasonableness standard for furnishers varies with circumstances)
- Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir. 2009) (scope of furnisher investigation depends on notice and available information)
- Westra v. Credit Control of Pinellas, 409 F.3d 825 (7th Cir. 2005) (collection agency relying on internal records may be reasonable when acting for original creditor)
- Johnson v. MBNA Am. Bank, N.A., 357 F.3d 426 (4th Cir. 2004) (furnisher’s failure to consult underlying documents can create jury question on § 1681s-2(b) reasonableness)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (U.S. 2007) (willfulness under FCRA includes reckless disregard of statutory duties)