The Court of Appeals for the Ninth Circuit has affirmed a lower court’s ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act, agreeing with the lower court that the defendant’s actions entitle it to use the statute’s bona fide error defense.
The background: The case began when a consumer sued a collection law firm after receiving a letter and subsequent lawsuit over a used car debt. The consumer alleged the firm violated the FDCPA as well as Oregon’s debt collection and trade practices laws. He argued the firm overstated the amount owed and failed to ensure the accuracy of its claims.
- The law firm countered that it had followed established internal procedures before sending the letter.
- This included reviewing the car dealer’s accounting ledger and the consumer’s signed sales contract, and asserted that any error was unintentional.
- The district court sided with the firm, finding that its practices were sufficient to invoke the FDCPA’s bona fide error defense.
The ruling: On appeal, the Ninth Circuit agreed, holding that even if a technical violation occurred, the firm met all three elements of the bona fide error defense: the violation was unintentional, it resulted from a genuine mistake, and the firm maintained procedures reasonably adapted to prevent such errors.
- The appellate panel focused on the third factor, concluding the firm’s process, which included verifying charges against the consumer’s signed agreement, reviewing supporting documents, and seeking an affidavit from the creditor, went beyond mere reliance on a client’s representations.
- That distinction, the court said, set the case apart from earlier rulings where the bona fide error defense was not allowed to be used.
- The opinion noted that “the bona fide error defense does not shield debt collectors who unreasonably rely on creditors’ representations,” but found the firm’s review of both the dealer’s and consumer’s documentation provided adequate safeguards.
- Because the consumer never disputed the debt after being invited to do so and the creditor affirmed the accuracy under oath, the court found the firm’s procedures sufficient and affirmed the dismissal of the federal claims.
