United States Court of Appeals For the Seventh Circuit ____________________ No. 23-2071 MICHAEL WOOD, Plaintiff-Appellant, v. SECURITY CREDIT SERVICES, LLC, doing business as EQUIPRO INVESTMENTS, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:20-cv-02369 — Sara L. Ellis, Judge. ____________________

SUBMITTED APRIL 4, 2024 — DECIDED JANUARY 28, 2025 ____________________

Before EASTERBROOK, HAMILTON, and KOLAR, Circuit Judges. KOLAR, Circuit Judge. In 2017, Pentagon Federal Credit Un- ion (PenFed) sent Michael Wood a letter saying that he was delinquent on his credit card payments. Wood disputed the debt in writing, and PenFed responded with another letter that said it had determined the debt was valid. In 2018, debt collector Security Credit Services, LLC (SCS) purchased a 2 No. 23-2071 bundle of debts, including Wood’s, from PenFed. SCS re- ported the debt as delinquent to a credit reporting agency without mention of Wood’s dispute. In this litigation, Wood alleges that SCS violated the Fair Debt Collection Practices Act (FDCPA) by communicating in- formation about his debt to a third-party without noting that he disputed the debt. The district court granted summary judgment for SCS. We reverse and remand. I. Background Michael Wood incurred credit card debt with PenFed. He eventually defaulted on the debt, and PenFed reported Wood’s debt to national credit reporting agencies, including Equifax. Wood, however, disagreed with the information re- ported by PenFed on his Equifax credit report. On April 26, 2017, Wood’s attorney sent PenFed a letter disputing the debt as too high. The letter stated that “this Notice has the same effect as a dispute to the validity of the alleged debt” and that it did not constitute “a refusal to pay, but a notice sent pursu- ant to the Fair Credit Reporting Act.” After investigating Wood’s dispute, PenFed concluded that the debt was accurately reported. On May 16, 2017, PenFed sent a response letter saying that “[a] review of our records for the account listed above indicates that the delin- quency in question is valid and will not be removed” from Wood’s credit report. The letter advised Wood or his counsel to contact PenFed “to set up a satisfactory repayment plan.” Neither Wood nor his attorney replied. According to Wood, despite his lack of response, he continued to believe the debt was inaccurate. No. 23-2071 3

When reporting debt information to national credit report- ing agencies, as required by the Fair Credit Reporting Act (FCRA), PenFed uses the “Metro-2 Format.” After PenFed de- termined that Wood’s debt was valid, and because it did not receive a response from Wood, PenFed reported an “XH” Metro-2 code for Wood’s debt. This code is used for accounts previously disputed but then resolved by an investigation. Other codes include the “XB” code, which is used for accounts where the consumer disputes the debt but an investigation is pending, and the “XC” code, which reflects that a creditor completed its investigation of a dispute but the consumer dis- agrees with the result. In July 2018, PenFed sold a bundle of accounts that in- cluded Wood’s account to SCS, a debt collector subject to the FDCPA. In the Purchase Agreement, PenFed made represen- tations and warranties that PenFed used commercially rea- sonable efforts to remove from the pool any accounts with “unresolved disputes,” that every account purchased had been maintained and serviced in full compliance with the FCRA, and that PenFed