Court decisions have long ago established that the bona fide error defense generally applies only to mistakes of fact, not mistakes of law. What does that mean? In the context of listing the amount of debt owed in a collection letter, the bona fide error would typically apply—assuming all other elements are met—in situations where there is a typographical error or a faulty math calculation. However, it would not apply where the debt collector misinterpreted how to comply with the Fair Debt Collection Practices Act (FDCPA). A recent case out of the District of Arizona shows an example of the latter.
So, what happened?
In Bazan v. Hammerman & Hultgren PC, the defendant—a collection law firm—sent a letter to the consumer that stated the amount of debt owed as "the sum of $6,162.30, plus accrued interest in the sum of $691.90, plus accruing interest at the contract rate of 24.99% per annum from after April 16, 2019." The consumer sued, alleging that the letter violated the FDCPA because it was unclear what amount of debt was actually due and it was deceptive.
The consumer filed a partial motion for judgment on the pleadings—which is, in essence, a request for judgment on the merits of the case, but made at the early stage of litigation. The consumer argued that the problematic statement could be read in three different ways, at least one of which would be false:
- That $691.90 represents the interest accrued between April 16, 2019, and the letter date.
- That the balance is $7,980.60 (including the identified interest plus the additional interest assessed on the original $6,162.30 amount).
- That the balance is $8,107.17 ( including the identified interest plus the additional interest assessed on the sum of the original amount AND the identified interest).
The court notes:
Although a generally astute or savvy individual might push back against one or more of these interpretations as less likely though not wholly impossible, the least sophisticated debtor standard "ensure[s] that the FDCP protects all consumers, the gullible as well as the shrewd . . . the ignorant, the unthinking and the credulous."
With this in mind, the court concluded that an FDCPA violation occurred. Among several other arguments made, the defendant argued that it should be relieved of liability because the bona fide error defense applies. The court, however, rejected this line of thinking, stating:
The bona fide error defense is inapplicable here because the violations alleged—making a deceptive representation and failing to effectively convey a debt—arise from legal judgments as to FDCPA obligations; they are not typos, faulty math calculations, or misprints.
With that, the court granted the partial motion for judgment on the pleadings in favor of the consumer.
Effectively, the court found that issues related to the phrasing used by debt collectors in their collection letters don't qualify for the bona fide error defense. Some examples of cases where the bona fide error did apply to the situation can be found in this article.
For an in-depth review of the bona fide error defense, iA Case Law Tracker subscribers can click here to see a full list of court decisions that discuss the bona fide error defense (there have been 53 since 2018), including short summaries of each case and a quick overview of where things worked and where they didn't.