On May 8, 2017, a federal judge in Arizona ruled that a debt collector was not entitled to a “bona fide error” defense to a Fair Debt Collection Practices Act (FDCPA) claim because it failed to present evidence of a procedure or policy tailored to address the specific error at issue, and thus failed to meet its burden of proof to establish the bona fide error defense. 

The case is Gibson v. US Collections West Incorporated (Case No. 16-00166, U.S. District Court, AZ). A copy of the court’s order can be found here


Charlotte Gibson owed money to North Valley Endodontic for medical expenses. At some point, she fell behind on payments and US Collections West Incorporated (USCW) began collection activity to recover her account’s balance. On September 22, 2015, Ms. Gibson wrote a letter informing USCW that she refused to pay. USCW received this notice on September 25, 2015. 

Despite receiving this letter, USCW concedes that it sent two additional debt collection letters to Ms. Gibson. It asserts, however, that these communications were sent in error after a clerk, who was trained to give refusal to pay letters to a manager to handle, mistakenly placed Ms. Gibson’s refusal letter into a box for dispute letters. 

Ms. Gibson filed suit, alleging a violation of the FDCPA. USCW conceded that it violated the FDCPA but that it should not be held liable because the violation was the result of a bona fide error, which is an affirmative defense under the statute. 

Both parties filed motions for summary judgment.

Editor’s Note: A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial. 

The Court’s Analysis and Order

The decision, written by the Honorable G. Murray Snow, was short and to the point. He first discussed the strict liability feature of the FDCPA and then the bona fide error defense. 

“The FDCPA imposes strict liability on debt collectors for continuing to contact a consumer once the “consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer.” 15 U.S.C. § 1692c(c). Although the FDCPA imposes strict liability in such cases, debt collectors may seek to demonstrate that their actions were the result of a “bona fide error” to avoid liability. 15 U.S.C. § 1692k. 

The bona fide error defense is an affirmative defense, for which the debt collector has the burden of proof. To establish the defense, the debt collector must establish, by the preponderance of the evidence, that (1) it violated the FDCPA unintentionally; (2) the violation resulted from a bona fide error; and (3) it maintained procedures reasonably adapted to avoid the violation. 

Judge Snow then reviewed the undisputed facts in the case and applied them to the above standard. Judge Snow concluded that USCW provided no evidence that it utilized procedures reasonably adapted to avoid mistakes in the handling of consumer mail. 

He wrote:

“The Ninth Circuit uses a two-step process to determine whether the “procedures” prong may have been satisfied. First the debt collector must [maintain]—i.e., actually [employ] or [implement]—procedures to avoid errors. Second the procedures must be ‘reasonably adapted’ to avoid the specific error at issue. 

To qualify for the bona fide error defense under the FDCPA, the debt collector has an affirmative obligation to maintain procedures designed to avoid discoverable errors.” And, further “[i]f the bona fide error defense is to have any meaning in the context of a strict liability statute, then a showing of “procedures reasonably adapted to avoid any such error” must require more than a mere assertion to that effect. The procedures themselves must be explained, along with the manner in which they were adapted to avoid the error.” Therefore, a defendant must assert and explain how a procedure or policy is tailored to avoid the specific mistake at issue to take advantage of the bona fide error defense. 

In the case at hand, the undisputed record reflects that the USCW clerk filed Ms. Gibson’s refusal letter as a dispute rather than giving it to a manager as a refusal letter. At the time of the incident, US Collections asserts that it had an unwritten policy that clerks were not to engage with accounts once an individual refused to pay. If a letter reflected a dispute, “it was to go into a dispute box.” If a letter reflected a refusal to pay, it “should go to a manger to have the manager handle it and a copy go to the collector.” The manager then flagged the file to ensure that no further correspondence occurred. 

This practice, while presumably sound practice under the statute itself, merely implements the statute and is not a procedure designed to discover avoidable errors. The only reference to the clerks’ initial sorting of mail in this case is US Collections’ assurance that it generally trains clerks on how to sort mail.

USCW failed to present evidence of a procedure or policy tailored to address the specific error at issue here, and thus it failed to meet its burden of proof to establish the bona fide error defense. 

USCW concedes that it violated the FDCPA by continuing to contact Ms. Gibson. Its only defense for the violation was its assertion of the bona fide error defense. Even taking these facts in a light most favorable to USCW, it is not entitled to the protection of the bona fide error defense in this case. Therefore, as a matter of law, the Court finds that Plaintiff Gibson has met all of the essential elements of her FDCPA liability claim and is therefore entitled to damages. Further, the Court finds that USCW failed to satisfy the requirements of the bona fide error defense, and therefore will not be excused from FDCPA liability as a matter of law.” 

insideARM Perspective 

This short Order should be mandatory reading for all compliance staff. Policies are important. But, the documented procedures to ensure the policy is followed are equally important. It is critical to create procedures “reasonably adapted to avoid mistakes.” 

Once policies and procedures are created it is also important to self-audit to ensure the policies and procedures are being followed. 

For an interesting “compare and contrast” exercise, readers should go back to our April 20, 2017 article on the Washington v. Convergent Outsourcing Case. In that case the defendant debt collector was successful in using the bona fide error defense by showing they had met the criteria described above. Convergent developed procedures. Convergent’s employees were trained and tested on these procedures. Finally, Convergent performed regular audits to ensure adherence to the procedures. 

As they say – Trust, but verify.

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