Are Your Procedures Sufficient to Support a Bona Fide Error Defense – Not if You Only Rely on Creditor Information

Author: Lori Quinn

The plaintiff filed a lawsuit against the defendant for violating the Fair Debt Collection Practices Act (“FDCPA”) related to a medical debt placed with the defendant for collection. Flores v Frost-Arnett Company, 2023 WL 155859, USDC AZ (Jan. 11, 2023). The defendant used a keyword search on the data provided by the creditor, and the search did not find that the account was associated with a worker’s compensation claim. After that, the defendant commenced collections by sending an initial collection letter to the plaintiff.  The plaintiff did not respond to the letter but filed a lawsuit against the defendant for violating the FDCPA.

The defendant filed a motion for summary judgment on its bona fide error defense, and the plaintiff filed his motion for partial summary judgment on the liability issue. The court denied the defendant’s motion finding defendant’s bona fide error defense did not meet the elements to support the defense. The court cited Urbina v Nat’l Bus. Factors Inc., 979 F.3d 758 (9th Cir 2020) in outlining the required showing for a bona fide error defense – “The bona fide error defense requires a showing that the debt collector: (1) violated the FDCPA unintentionally; (2) the violation resulted from a bona fide error; and (3) the debt collector maintained procedures reasonably adapted to avoid the violation.”

Here, the court found the defendants keyword search was not “reasonably adapted to avoid the violation” relying on the Ninth Circuit’s holding in Urbina “…the Ninth Circuit has held that procedures that merely rely on a creditor to provide accurate information are insufficient.” While acknowledging the defendant ran a keyword search, the court found that the bona fide error defense failed because its procedure relied on information provided by the creditor. “Indeed, the procedure will detect a worker’s compensation related debt only when the creditor provides accurate information… If the creditor provides inaccurate information – as it did here – the software scrub won’t catch the worker’s compensation related keywords.” The court found that the procedure was inadequate to avoid an FDCPA violation “because, at bottom, those procedures rely on a creditor to provide accurate information.”