Brooke Persinger v. Southwest Credit Systems, L.P.

Case Type:
Case Status:
21‐1037 (7th Circuit, Dec 22,2021) Published
The U.S. Court of Appeals for the Seventh Circuit (Circuit) affirmed the grant of summary judgment by the U.S. District Court for Southern District of Indiana (DC) to Southwest Credit Systems (SW), which had been sued for violating the Fair Credit Reporting Act (FCRA) by attempts to collect the indisputable prepetition debt of Brooke Persinger (Persinger) after her 2017 discharge, upon finding that Southwest’s compliance procedures were reasonable and thus met the FCRA's requirements and sidestep liability.
Procedural context:
Consistent with its internal policies, after receiving a request to collect on a delinquent account in Persinger’s former name, Brooke Casey, for a debt owed to Viasat Residential (Viasat), having been previously listed as a creditor for an entirely different debt in the joint petition filed by Persinger and her husband that had been discharged at the end of their chapter 7 case, Southwest accessed Persinger's credit information to determine whether she had ever filed for bankruptcy. In response, Persinger filed a class‐action complaint against Southwest, alleging violations of the FCRA. Following discovery, the parties filed ross‐motions for summary judgment. The DC granted Southwest’s motion and denied Persinger’s motion. On appeal, Persinger timely challenged the grant of summary judgment to Southwest.
Persinger and her husband jointly filed for bankruptcy in 2017. When they did so, their joint chapter 7 petition listed each creditor to which they individually, or jointly, owed a debt, including Southwest, who was servicing an AT&T debt, the only one for Southwest was identified as a creditor, incurred by Persinger’s husband in 2014. The discharge order, issued pursuant to 11 U.S.C. § 727, listed Persinger’s four former names, including, as relevant here, Brooke Casey, and was noticed to all known creditors, including Southwest. Southwest's procedures then came into play. When Southwest received this notice, it scanned its system for affected accounts. However, Southwest had already closed the AT&T account, even before application of its usual policy--to close accounts subject to bankruptcy--had been triggered by this notice. In addition to this policy, Southwest had another in place by which it learns about discharged debts. Specifically, upon receiving a new account, Southwest orders a “bankruptcy scrub” from LexisNexis, a process by which LexisNexis searches for bankruptcy information connected to that account. If matching bankruptcy data is discovered, it is immediately returned to Southwest; if not, LexisNexis stores the account information and continuously searches for matches, forwarding any bankruptcy data it later finds. If a bankruptcy scrub reveals that an account is subject to bankruptcy, Southwest also closes the account. January 2018 proved pivotal to this dispute. In that month, Southwest received a delinquent account in Persinger’s former name, Brooke Casey, for a debt owed to Viasat Residential. This debt, though delinquent since 2014, was not listed on Persinger’s 2017 bankruptcy petition. When a bankruptcy scrub netted no immediate result, Southwest proceeded in its collection efforts. Accordingly, it first ordered a “propensity‐to‐pay score” from a consumer credit reporting agency. Critically, this is not a full credit report but rather a form of “soft pull” indicating the likelihood of repayment on a scale of 400 to 800, one not visible to third parties and without effect on one’s credit score. Several months after Southwest ordered this score, LexisNexis updated Persinger’s account with information about her 2017 bankruptcy. Upon receiving this update, Southwest closed the account. When Persinger sued, it was the provision of the report that she characterized as an FCRA violation.
Daniel A. Manion; Diane P. Wood; and Michael B. Brennan

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