Debt collector’s legal mistake not fatal because it was a bona fide error under the FDCPA

In Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 538 F.3d 469 (6th Cir., August 18, 2008) the Debtor brought an action against a debt collection law firm alleging violations of the FDCPA arising from the law firm’s use of a deceptive foreclosure notification. The debtor claimed that Defendants violated the FDCPA by representing that her debt would be presumed valid unless she disputed the debt in writing. The FDCPA does not require that the dispute be in writing. See, _Camacho v. Bridgeport Financial, Inc._, 430 F.3d 1078 (9th Cir.2005) (a debt collector’s notice violates the FDCPA in so far as it states that disputes of validity of debts must be in writing). Nonetheless, the law firm was let off the hook by invoking the bona fide error defense. Relying on opinions from the Tenth and Seventh Circuit, the Sixth Circuit held that the bona fide error defense under the FDCPA applies to mistakes of law as well as to clerical errors. In ruling this way the Court distinguished the contrary authority which analogized the FDCPA’s bona fide error defense with the nearly identical language found in TILA’s bona fide error defense provision (which has been held to apply only to clerical errors). Because TILA’s bona fide error provision expressly excludes errors of legal judgment while the analogous provision in the FDCPA does not have such limitation suggests that, unlike the TILA, Congress did not intend to limit the defense to clerical errors. The case also instructs how a firm can maintain procedures reasonably adapted to avoid error. The law firm’s practice of designating its senior principal, who regularly attends conferences and seminars that focus on FDCPA issues, as the individual responsible for compliance with the FDCPA and the firms regular subscription to CLE materials on FDCPA and other efforts to keep abreast of the law were deemed sufficient to demonstrate the maintenance of procedures reasonably adapted to avoid errors in legal judgment.

Author

  • Solomon Maman

    Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.