U.S. Supreme Court to Review Bona Fide Error Defense to FDCPA Violation
On June 29, 2009, the United States Supreme Court agreed, in its next term, to examine whether the Fair Debt Collection Practices Act’s ("FDCPA") bona fide error defense applies to mistakes of law. See 15 U.S. C. § 1692(k). In the case the Court will consider, a law firm sent a debtor a “validation notice” under the FDCPA which mistakenly stated that the debtor had to dispute the debt in writing. The debtor filed a class action lawsuit against the law firm on the grounds that the FDCPA does not require a debtor to dispute the debt in writing.
The district court dismissed the claim on summary judgment, finding that the bona fide error defense applies to a mistake of law like the one made by the law firm and that the law firm maintained procedures reasonably designed to avoid the error. The Sixth Circuit Court of Appeals affirmed the judgment. See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 538 F.3d 469 (6th Cir. 2008). In doing so, the appeals court distinguished the FDCPA’s bona fide error defense from the similar defense in the Truth in Lending Act, which only applies to clerical errors. The Supreme Court’s decision in the case likely will resolve a split among the circuit courts regarding the applicability of the FDCPA’s bona fide error defense to mistakes of law. The Sixth, Seventh and Tenth Circuits have held that the defense applies to mistakes of law; the Second, Eighth, and Ninth Circuits have held that it does not.
Click here to read the Sixth Circuit's Jerman decision.