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Judge Rules Jury Must Decide if Defendant Made Bona Fide Error in FDCPA Letter Case

A District Court judge in Illinois has granted a collection agency’s motion for summary judgment in ruling that it is not a debt collector as defined by the Fair Debt Collection Practices Act, but denied a motion for summary judgment after the defendant attempted to use the bona fide error defense in explaining how more than six thousand letters were sent out with the incorrect creditor’s name in them, saying that is for a jury to decide.

A copy of the ruling in the case of Ferris v. Convergent Outsourcing, Inc., and Transworld Systems, Inc., can be accessed by clicking here.

The plaintiff received a collection letter from Convergent, which was servicing student loans on behalf of Transworld. The collection letter indicated that Chase was the creditor, even though the loan had been transferred to the National Collegiate Student Loan Trust. Convergent sent out 6,011 letters to more than four thousand individuals with the mistaken creditor.

Because Transworld was servicing loans before they went into default, it does not meet the definition of debt collector under the FDCPA and was dismissed from the case, Judge Edmond Chang of the District Court for the Northern District of Illinois, Eastern Division, ruled.

With respect to the bona fide error defense, however, a reasonable jury “could not find that the error was intentional, or that it was not bona fide,” Judge Chang ruled, but whether the defendant “maintained procedures reasonably adapted to avoid any such error,” the third prong of substantiating a bona fide error defense, a reasonable jury could find for either side.

The defendant could have improved its review process for making programming changes to its software system and it could have conducted spot checks on its letters to catch errors “like this one,” Judge Chang wrote.

The jury could go either way on whether a programming procedure or spot-checking procedure was reasonably required to prevail on the defense. … In contrast, however, a reasonable jury could conclude that it would be unreasonable to require Convergent to have that sort of programming procedure in place. The FDCPA does not require perfect foresight

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