A California Appeals Court has overturned a lower court’s dismissal of a Fair Debt Collection Practices Act case, ruling that even a mistaken attempt to collect a debt from the wrong person can be subject to liability.
The background: This case began when the plaintiff filed a collection lawsuit against the defendant. The defendant, upon receiving the complaint, filed a cross-complaint alleging identity theft, arguing that the debt collection action was directed at her in error. She claimed that she was not the person who had incurred the debt, and that the debt was tied to a different individual with the same name but different identifying details. After being notified of the mistaken identity, the plaintiff dismissed the debt collection suit.
- The defendant chose to continue with her cross-complaint, citing violations of both the FDCPA and California’s Rosenthal Fair Debt Collection Practices Act, citing the strict liability nature of the statutes that penalize false or misleading debt collection attempts, regardless of intent, unless a narrow “bona fide error” defense can be demonstrated.
- The plaintiff subsequently filed an anti-SLAPP motion to strike the cross-complaint, which the lower court granted. The court found that there was “nothing inherently false” about attempting to collect the debt, reasoning that the defendant should have recognized that the address linked to the debt did not belong to her.
The ruling: The Appeals Court reversed the lower court’s ruling, stating that the FDCPA was intended to protect consumers from abusive practices, including situations involving mistaken identity. The Court noted that numerous federal cases have allowed claims under the FDCPA in similar situations, where mistaken identity led to attempts to collect from the wrong person. It found that even if the plaintiff mistakenly targeted the wrong individual, it was still liable for its actions unless it could prove that the error was a “bona fide” mistake and that reasonable procedures were in place to avoid such mistakes.
- The Appeals Court also emphasized that being served with a summons and complaint carries significant consequences, including the risk of default judgment if the defendant fails to respond. The Court found that even the “least sophisticated debtor” could be misled by being served with a lawsuit accusing them of owing a debt they did not incur.
