While many people who read this and other Consumer Credit boards are aware of the existence of Bonafide Error as a collector’s defense against a FDCPA lawsuit, there is a lot of confusion out there as to exactly what this defense is and how it works 9and how to attack it when it is raised).
FDCPA §813( c ) reads:
“A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”
You will notice that the Statute specifically imposes on this defense the following requirements:
1. That the debt collector has a burden of proof to show through a preponderance of evidence
2. That the error was unintentional and made in good faith,
3. That the error was a clerical mistake and not a misinterpretation of the law, and
4. That there are policies and procedures in place to prevent the violation in question.
Collectively, this is classified as an “Affirmative Defense”, which means that the defense imposes on the party raising ita burden of proof. If that burden of proof is not met, or is successfully attacked, the defense fails.
Let’s look at each of these in depth.
That the debt collector has a burden of proof to show through a preponderance of evidence
Preponderance of evidence means “The level of proof required to prevail in most civil cases. The judge or jury must be persuaded that the facts are more probably one way (the plaintiff's way) than another (the defendant's).” (Lectric Law Dictionary) This is a relatively low standard, meaning the decider of fact is 51% convinced of the truth that the burden of proof has been met. While it is a low level of proof, it is certainly attackable, and Discovery is how you would attack it. The records necessary will not be in your possession - they will be in the Collector’s - and you can be certain the collector will fight all attempts to give them up. Assume you will need a Court Order in the form of an Order to Compel to allow their Discovery and production to you.
That the error was unintentional and made in good faith
Good Faith is one of those concepts that has no hard and fast definition, but is more of a general “look and feel” based on the facts and circumstances. Lectric Law Dictionary defines Good Faith thus: “Honestly and without deception. An agreement might be declared invalid if one of the parties entered with the intention of defrauded the other.
The duty of each party to an agreement (and all officers, employees, or agents of each party) to act in a fair and equitable manner toward each other so as to guarantee each party freedom from coercion, intimidation, or threats of coercion or intimidation from the other.”
FDCPA is a “Strict Liability” Statute - meaning that the proof of the existence of a violation generally makes the award of damages almost automatic by the Courts. I use the term “almost” because the law built a narrow defense of Bona Fide Error into the Statute. Proof of the collector’s intent is not required in asserting damages for the violation, but proof of the collector’s lack of intent is critical to the Bona Fide Error defense. Multiple violations of the same provision of FDCPA would normally be strong evidence that the error was not unintentional and not made in good faith. Unconscionable and repeated collection tactics that violate FDCPA Sections 805 (Communication places, times, etc.), 806 (Harassment and abuse), 807 (False and misleading representations) and 808 (Other unfair practices) would generally be successful in rebutting a Bona Fide Error defense under the doctrine of “One violation can be a bona fide error, two a couple of mistakes, but ten are Company policy”.
There is case law on this aspect: Beasley v Blatt 1994 WL 362185 (N.D. Ill. July 11, 1994) - debt collector could not invoke defense that it believed it was dealing with a commercial and not a consumer account when it was established that the debt collector regularly mailed identical form collection letters to consumer and commercial debtors alike; Sutton v Law Offices of Alexander L. Lawrence 1992 U.S. Dist. LEXIS 22761 (D. Del. June 17, 1992) - no bona fide error defense where defendant law office failed to provide any evidence that the requisite disclosure under §§ 1692e(11) or 1692(g) were normally included in correspondence; Read v Amana Collection Services, Clearinghouse No. 46,356 (W.D. N.Y. 1991) - violations occurred on forms routinely used by collector; Page v Checkrite, Ltd., Clearinghouse No. 45,759 (D. Neb. 1984) - routine failure to provide 15 U.S.C. § 1692e(11) notices could not be excused as bona fide error.
Note that the lack of intent to violate FDCPA is not a bona fide error defense. See Johnson v Riddle, 205 F.3d. 1107 (10th Cir 2002); Lewis v ACB Bus. Servs., Inc., 135 F3d 389 (6th Cir 1998)
In arguing that the error was unintentional and made in good faith, collectors often try to use the argument that the violation was a mere “technical” violation and not worthy of the Court’s valuable time. This argument is rebutted by reminding the Court that Congress took great care in crafting each and every protection of FDCPA, that Congress intended the law to provide substantitive protection to consumers and the requirement under jurisprudence that the Courts enforce the plain language of the Act and not substitute their own judgment for that of Congress.
Collectors will often raise a whole host of other side arguments that all go back to a doctrine called the “Unclean Hands” doctrine - that some misdeed by the consumer at some time excuses their violation of FDCPA. Lectric Law Dictionary defines “Unclean hands” thus:
“Under the clean hands doctrine, a person who has acted wrongly, either morally or legally - that is, who has 'unclean hands' - will not be helped by a court when complaining about the actions of someone else.
Unclean hands can be used as an affirmative defense in cases where the complaint is equitable.”
Obviously, collectors are quick to point out that the simple act of defaulting on a debt gives the consumer Unclean Hands, and that any and all violations of FDCPA therefore should be excused. This argument takes the entire legislative intent of FDCPA and turns it on its head - rendering the protections of FDCPA available only to those consumers who have not defaulted on any debt - exactly the people who do NOT need such protections. (See Irwin v Mascott 96 F Supp. 2d 968 (N.D. Cal. 1999) - no fraud exception to the FDCPA; the consumer’s alleged fraudulent intent was irrelevant); Ditty v. Check Rite, Ltd. 182 F.R.D. 639 (D. Utah 1998) - FDCPA protects even dishonest checkwriters: “even if there is some hint of personal dishonesty among the plaintiffs (the consumer)... that provides the defendants (the collectors) with impeachment material and no more.”; Bailey v Clegg, Brush & Assoc., Inc. 1991 U.S. Dist LEXIS 21591 (N.D. Ga. June 14, 1991) - court struck from debt collector’s answer language alleging that (consumer’s) law firm brought action to avoid consumer’s legitimate debts as scandalous.)
Compare the argument made above with the arguments made on InsideARM for their claim that all FDCPA suits are “frivolous”.
That the error was a clerical mistake and not a misinterpretation of the law
The defense is available for clerical mistakes, such as a broken keyboard key, an error in data transposition or an innocent error of fact regarding the consumer nature of the debt (as opposed to commercial) being collected. See Edwards v McCormick 136 F Supp. 2d 795 (S.D Ohio 2001) - Sixth Circuit explicitly held that bona fide error defense applied only to clerical errors; Goodman v Southern Credit Recovery, Inc. 1999 WL 14004 (E.D. La. Jan 8, 1999) - placement of a collection letter with an incorrect address was bona fide error. There are many more.
That there are policies and procedures in place to prevent the violation in question.
This is an interesting element in the bona fide error defense because it allows the consumer to call into question then following (all of which can be used to impeach the bona fide error defense), along with the Discovery implications)
1. What are the policies and procedures in place at the time of the violation that were designed to avoid this error (and provide copies and documentation thereof - this applies to all items in this list)?
2. How and how often were these policies and procedures communicated to the employees of the Collector?
3. How, when and how often were they communicated to the employee who committed the violation?
4. What continuing training in this area has been provided? (and provide copies of all texts, handouts, worksheets and other materials)
5. What are the professional qualifications of the instructor?
6. When were these policies and procedures put into place (there is case law where the defense was rejected because the policies were put in place after the violation occurred)
As we can see, it is far easier to raise the Bona Fide Error defense than it is to sustain it. In fact, most times this defense has been raised, it has been rejected. This is typically for one or both of two reasons:
1. The consumer successfully impeached the elements necessary to prove bona fide error, or
2. The collector’s own repeated violations of the same FDCPA provision belied the bona fide error assertion.
Either way, the defense failed.