The Ninth Circuit Court of Appeals has overturned a lower court’s ruling that granted summary judgment in favor of a debt collector that was sued for violating the Fair Debt Collection Practices Act because it was entitled to the Bona Fide Error defense, determining that the lower court erred in assessing the BFE test.
A copy of the ruling in the case of Urbina v. National Business Factors can be accessed by clicking here.
The plaintiff incurred a debt to a medical provider. The plaintiff eventually placed the debt with the defendant, which attempted to collect. The collection letter included a request for repayment of principal and interest. The plaintiff alleged the defendant violated the FDCPA because it was not allowed to charge interest on the unpaid debt, and, if it was, it was using the wrong start date and did not have the proper procedures in place to avoid such an error. The defendant argued that it relied on information that was provided by the original creditor and should be entitled to the Bona Fide Error defense. A District Court judge agreed with the defendant and granted its request for summary judgment.
But the lower court was a little too lenient in awarding the defendant the benefit of the BFE defense, the Ninth Circuit ruled after looking at the case. A “boilerplate” agreement between the creditor and the defendant was not enough to provide cover to the defendant for violating the FDCPA, the Ninth Circuit ruled. If that were in fact true, then the defendant’s “statutory duty” under the FDCPA was being “effectively outsourced.” Defendants are not allowed to simply rely on the information they are being provided, the Ninth Circuit ruled. Relying on a promise to provide accurate data is not a reasonable procedure under the FDCPA, the Court ruled.
