Even if the bona fide error defense were available to mistakes of law under the FDCPA it was not met where the debt collector relied solely on an industry news letter which expressly disclaimed that it constituted legal advise

In January 2006 an owner of defaulted debt sent a letter to each class member announcing it just purchased the debt and identified the debt collector it retained. The letter contained all of the required disclosures but was accompanied by a second document titled Privacy Notice of Financial Information. The notice, purportedly sent in compliance with the Gramm-Leach Bliley Act, Pub.L. 106-102, 113 Stat. 1338 (1999), stated that [t]o the extent permitted by law, we may collect and/or share all the information we obtain in servicing your account. We collect information about you to service your account with the highest quality. It also said [w]e may share information about you (whether you are a customer or former customer) to the [certain] third parties. The Plaintiff class complained in Ruth v. Triumph Partnerships, (NO. 08-3458) (7th Cir., August 17, 2009) that this violated the FDCPA because the notice falsely stated that the defendants, by law, could disclose certain nonpublic information about the debtor without the debtor’s permission, and would do so unless the debtor expressly opted out. The Plaintiff submitted that these statements were false because the FDCPA prohibits debt collectors from sharing nonpublic information about a debtor without the debtor’s explicit consent. Among other reasons, the district court granted summary judgment to the defendants under the bona fide error defense. The Seventh Circuit reversed the district court finding that, although the availability of the defense to errors of law is unsettled in the Seventh Circuit, it was not met in this case. If it is available it is only available to debt collectors who can establish that they reasonably relied on either: (1) the legal opinion of an attorney who has conducted the appropriate legal research, or (2) the opinion of another person or organization with expertise in the relevant area of law. The defendants did not meet this threshold. The court was unimpressed by the collector’s reliance on an industry pamphlet titled Questions and Answers about New Federal Privacy Regulations As They Apply to Debt Buyers and Other ‘Financial Institutions.’ The pamphlet [fell] far short of a legal opinion on which it was reasonable for the defendants to rely. It did not even purport to give advice about the FDCPA; it was focused on compliance with federal regulations implementing the privacy provisions in the Gramm-Leach-Bliley Act. Also, the pamphlet specifically disclaimed that it was providing legal advice, and directed the reader to consult an attorney before taking any action. Finally, the pamphlet did not provide any advice about how a disclosure notice should be worded to comply with the FDCPA. The judgment was reversed and the district court was instructed to enter judgment for the Plaintiff class.

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