A District Court judge in Maryland has granted a plaintiff’s motion to strike four of the five affirmative defenses put forth by a defendant in a Fair Credit Reporting Act and Fair Debt Collection Practices Act case — including the use of the Bona Fide Error defense — ruling that the use of the BFE defense is subject to a heightened standard at the pleading stage of a case and that the defendant was required to identify specific policies to avoid such errors from occurring.
A copy of the ruling in the case of the Consumer Financial Protection Bureau v. Fair Collections & Outsourcing can be accessed by clicking here.
The CFPB filed its lawsuit against the collector last year, alleging it violated the FCRA and FDCPA for failing to ensure the accuracy of information submitted to credit reporting agencies, failing to reasonably investigate disputes, and collecting debt without a reasonable basis to assert it was owed. The defendant has already had a motion to dismiss denied by the judge, who gave the defendant 14 days to file an amended affirmative defense curing the defects he identified.
The defendant put forth five defenses — that it was not liable because of the BFE defense, that the plaintiff was barred from seeking equitable relief by the doctrine of unclean hands, that the CFPB’s leadership structure was unconstitutional at the time the lawsuit was filed, that the plaintiff lacks standing because it is not subject to the Congressional appropriations process, and that the statute of limitations on the alleged offenses had expired.
With respect to the BFE defense, the defendants argued that it maintained “detail[ed] policies and procedures for furnishing accurate information to the consumer reporting agencies, including policies and procedures focused on obtaining data from creditors, confirming the accuracy and integrity of that data, receiving, reviewing, investigating, and responding to consumer disputes (direct and indirect), auditing, and training employees” and that any error was unintentional, but the defendant was not specific enough, Judge George Hazel of the District Court for the District of Maryland ruled. “… Defendants have identified neither specific errors nor specific policies that were maintained to avoid such errors,” Judge Hazel wrote. “Moreover, they have not ‘explain[ed] their procedures,’ as they assert in their Opposition to Plaintiff’s Motion to Dismiss.”
