LVNV, Resurgent Capital Services Improperly Reported Settled Account as ‘In Collections’ with Unpaid Balance, Case Claims

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A California consumer claims in a proposed class action that LVNV Funding, LLC and Resurgent Capital Services, LP falsely stated on his credit report that an account had an outstanding balance and was still in collections.

According to the case, the plaintiff’s account should have been reported as closed with a $0.00 balance pursuant to a settlement with the defendants.

The 26-page lawsuit alleges the defendants, upon information and belief, have taken similar actions against “numerous individuals” in California by reporting their closed accounts as still “in collections,” with an unpaid balance purportedly owed.

“Therefore, DEFENDANTS have knowingly and willfully furnished inaccurate credit reporting information that DEFENDANTS knew or should have known was inaccurate with respect to all such consumers residing within the State of California with whom it has settled a debt collection account within the previous seven (7) years,” the complaint alleges.

LVNV and Resurgent operate by purchasing consumer debts that are alleged to be owed and in default and then filing collection lawsuits against the consumers in state court, the suit explains, relaying the defendants file hundreds, if not thousands, of debt collection lawsuits in California each year.

In September 2019, the plaintiff entered into an agreement with the defendants whereby he agreed to pay a one-time total settlement amount of $1,250.00 in exchange for a release of any further amounts alleged to be owed on the account at issue, according to the suit. On October 31, 2019, the plaintiff paid the full agreed-upon amount, the suit says, and was informed in a May 4, 2020 email from the defendants’ counsel of a written record that he had paid the obligation.

“Therefore, as of the date that the monies had been paid by Plaintiff on October 31, 2019, Plaintiff had been discharged of any obligation to owe any further sums of money to DEFENDANTS upon the account, and Plaintiff therefore owed $0.00 to DEFENDANTS as of that date,” the case states.

The plaintiff says he discovered in late June, however, that LVNV and Resurgent had updated their reporting of the closed account on April 1, 2020 with false information indicating the account was still “in collections” and had a balance of $1,214.00. Per the case, the defendants reported the false credit information to consumer reporting agencies despite knowing it was inaccurate.

The complaint alleges that Metro 2—policies and procedures for credit reporting implemented by Experian, Equifax and TransUnion that the defendants allegedly agreed to follow—specifies that if an account “has been zeroed out,” the “in collections” mark is to be removed and the account reported as “closed.”

The defendants acted with “reckless disregard” by “knowingly and willfully” ignoring its obligation to accurately report the plaintiff’s debt and have harmed his creditworthiness, the lawsuit, which was recently removed to California’s Southern District Court, argues.

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