On May 8, the U.S. Court of Appeals for the 3rd Circuit affirmed the district court’s dismissal of a consumer’s complaint alleging that a debt collector violated the FCRA by furnishing inaccurate information to a consumer reporting agency (CRA) that his credit card debt was active and in collections, and that the CRA violated FCRA by reporting this information. The consumer did not dispute that he owed the debt but argued that reporting it as “in collections” was inaccurate because a Pennsylvania state court dismissed the debt collector’s lawsuit with prejudice for failure to prosecute. The district court dismissed the complaint under Rule 12(b)(6), finding no actionable inaccuracy had been alleged.

On appeal, the 3rd Circuit agreed, noting that the FCRA treats a report as inaccurate only when a “reasonable reader” would interpret it as conveying “materially false or misleading” information. The court recognized a “split of authority” among circuits over whether a legal challenge to a debt’s enforceability can make a credit report “inaccurate” under the FCRA but chose not to settle the question. Even assuming such a legal dispute could support a FCRA claim, the court held the consumer did not show that the “with-prejudice dismissal” barred all future collection efforts, noting that under Pennsylvania law courts generally do not treat failure-to-prosecute dismissals as having “preclusive effect,” even when labeled as with prejudice. The court further noted that the consumer effectively disavowed his sole theory of relief in a post-briefing filing and ultimately held that whether the debt collector could still pursue the debt was not sufficiently obvious to render the “in collections” designation inaccurate under the FCRA.