United States District Court, E.D. Michigan, Southern Division
ORDER (1) GRANTING DEFENDANT UNITED STATES DEPARTMENT
OF EDUCATION'S MOTION FOR SUMMARY JUDGMENT, AND (2)
GRANTING IN PART AND DENYING IN PART DEFENDANT PENNSYLVANIA
HIGHER EDUCATION ASSISTANCE AGENCY'S MOTION FOR SUMMARY
TERRENCE G. BERG UNITED STATES DISTRICT JUDGE.
Angela Smith was the victim of identity theft in January 2014
when someone used her name, social security number, and date
of birth to obtain four educational loans to attend Indiana
Institute of Technology. Defendant Pennsylvania Higher
Education Assistance Agency, d/b/a FedLoan (“Defendant
FedLoan”) serviced the loans until November 2016, when
they were transferred to Defendant United States Department
of Education (“Defendant USDOE”) for servicing.
January 15, 2018, Plaintiff filed this lawsuit against
Defendants for violating the Fair Credit Reporting Act
(“FCRA”) and the Michigan Regulation of
Collection Practices Act (“MRCPA”) based on the
Defendants' conduct surrounding Plaintiff's dispute
of the debts. Defendants have each moved for summary judgment
on separate grounds. Defendant USDOE argues that it is immune
from suit pursuant to the doctrine of sovereign immunity.
Defendant USDOE's Motion for Summary Judgment, ECF No.
71. Defendant FedLoan argues that Plaintiff cannot recover
because she has not sustained any damages or, alternatively,
that its investigation of Plaintiff's dispute was
reasonable as a matter of law. Defendant FedLoan's Motion
for Summary Judgment, ECF No. 72.
reasons below, Defendant United States Department of
Education's Motion for Summary Judgment (ECF No. 71) will
be GRANTED. Defendant FedLoan's Motion
for Summary Judgment (ECF No. 72) will be GRANTED in
part and DENIED in part.
March 2015, Plaintiff received a letter in the mail from
Defendant Fedloan that listed student loan debts that
Plaintiff did not recognize. Plaintiff's Response to
Defendant FedLoan's Motion for Summary Judgment, ECF No.
81 PageID.2333. Plaintiff has never had any student loans.
Id. Plaintiff obtained a copy of her credit report
and contacted Defendant FedLoan via telephone to tell them
that the debts did not belong to her. Plaintiff's
Deposition, ECF No. 72-6 PageID.1484. After that call, on
FedLoan's advice, Plaintiff filed a police report for
identity theft. Id. FedLoan then sent Plaintiff a
packet of documents to fill out to support her claim of
identity theft and requesting a copy of the police report she
filed, noting that “[f]ailure to enclose a copy of the
police report will result in us taking no further action on
your claim of identity theft.” Fraud Packet, ECF No.
72-8. FedLoan sent an identical set of documents to Plaintiff
again in August 2015. Plaintiff's Deposition, ECF No.
72-6 PageID.1485. Plaintiff did not return either fraud
packet and she did not send a copy of the police report to
Defendant FedLoan. Id.
did, however, continue to dispute that the debts listed on
her credit report in fact belonged to her. She sent two
letters to Defendant FedLoan on May 12, 2017 and August 22,
2017 stating: “I do not have an account with you. I
have never had an account with you . . . These are not my
accounts.” ECF No. 72-11 PageID.1607; PageID.1534. On
the same dates, Plaintiff also sent dispute letters to
Defendant USDOE with similar information, stating “I
did not sign, apply [for] or authorize  this loan, ”
Id. at PageID.1600, and “I did not borrow any
money to attend school nor do I know who did . . . nor do I
have any idea what dates they allegedly attended . . . I did
not borrow anything from you and I did not sign anything
authorizing these debts.” Id. at PageID.1604.
In her second letter to Defendant USDOE, Plaintiff
specifically states that she is not alleging that the loans
were fraudulently obtained. Id. In this letter, she
also states that she did not file a police report alleging
fraud, although a police report from March 2015 is in the
record. Id. On June 12, 2015, Defendant FedLoan
informed Plaintiff in writing that it had verified that the
debts listed did belong to her.
this time, Plaintiff also sent lengthy dispute letters to
various credit reporting agencies, which she included in her
direct correspondence with both Defendants. These letters to
the credit reporting agencies are dated April 1, 2016,
December 3, 2016, February 25, 2017, May 12, 2017, and August
22, 2017. Correspondence, ECF No. 72-11 PageID.1535-1607. In
her letters to the credit reporting agencies, Plaintiff
disputed numerous aspects of the information listed on her
credit report, including her address, date of birth, and
educational history, and always stating that the four FedLoan
debts on her credit report did not belong to her.
response to Plaintiff's dispute letters sent directly to
the credit reporting agencies, each agency generated an
electronic report of the dispute called an Automated Consumer
Dispute Verification (“ACDV”). Leslie Harris'
Deposition, ECF No. 72-4 PageID.1195-96. Each ACDV was
forwarded to Defendant FedLoan. Id. None of the
ACDVs used the dispute code for an allegation of identity
theft or fraud. Instead, the ACDVs in the record use dispute
codes 001-“loan not his/hers” or 002-
“belongs to another individual with the same or similar
name.” ACDVs, ECF No. 72-13. Defendant FedLoan
“reviewed the underlying loan document and confirmed
that it contained Plaintiff's correct date of birth, name
and social security number” when it received the ACDVs.
FedLoan's Motion for Summary Judgment, ECF No. 72
PageID.879-80 (citing Leslie Harris' Deposition, ECF No.
72-4 PageID.1306; ACDVs, ECF No. 72-13 response code
section). Because the underlying loan document did
contain Plaintiff's correct information, Defendant
FedLoan concluded that Plaintiff's dispute was unfounded
and continued to report the disputed debts. Id.
FedLoan performed the same investigation in response to each
of Plaintiff's disputes. ECF No. 72 PageID.888. In May
2018, Defendant USDOE informed Defendant FedLoan that the
debts were fraudulently obtained. Plaintiff's
Declaration, ECF No. 81-2 PageID.2360. Based on that
information, Defendant FedLoan requested that the credit
reporting agencies delete the debt from Plaintiff's
credit report. Id.
FedLoan communicated with Plaintiff several times regarding
the fraudulent loans and Plaintiff's purported obligation
to pay them. On March 12, 2015, Defendant sent Plaintiff two
letters, one notifying her that her payments were “past
due, ” ECF No. 81-6 PageID.2525, and one stating that
“[FedLoan] may negatively credit report you, ”
ECF No. 81-7 PageID.2529. Defendant sent similar letters on
June 26, 2015 and August 11, 2015. ECF No. 81-8-81-9. On July
11, 2016, Defendant sent Plaintiff a letter stating that
Plaintiff had ignored Defendant's “repeated
attempts to resolve the delinquency” and as a result
“must now pay the loans IN FULL.” ECF No. 81-11
PageID.2545. On August 12, 2016, Defendant sent Plaintiff a
final letter stating that her loans had defaulted. This
Your failure to pay your federal student loans is a severe
violation of the terms and conditions of your federal student
loan agreement. Defaulted federal student loans are not
released or forgiven. The U.S. Government pursues defaulted
borrowers until the owed amounts are collected.
Consequences of default include ineligibility for federal
student financial aid. In addition, you account may soon be
sent to the U.S. Department of Education's Default
Resolution Group for additional collection activities, which
. Wage garnishment.
. Offset your federal student loan debt
against your federal tax return.
. Possible legal action by the United States
Department of Justice.
. Assessment of collection costs and fees
.Credit bureaus will be notified, and your
credit rating may suffer.
Please contact our experienced loan counselors immediately to
take the appropriate action. We may still be able to offer
assistance before the negative ...