A District Court judge in Nevada has denied a plaintiff’s motion for summary judgment and instead granted summary judgment in favor of the defendant because its violation of the Fair Debt Collection Practices Act was not intentional and falls within the statute’s bona fide error defense.
A copy of the ruling in Urbina v. National Business Factors, Inc. of Nevada can be accessed by clicking here.
The plaintiff received a collection letter in response to an unpaid medical debt. The letter requested payment of unpaid principal and interest. The plaintiff alleged the defendant was not permitted to charge interest under Nevada law, and even if it was, calculated the interest from the wrong start date and did not have procedures in place to avoid such an error.
The defendant admitted it started charging interest from the wrong date, but that occurred because the client incorrectly noted the date of last payment when the account was assigned to the defendant.
In order to be allowed to charge interest, the account must be a “book account” under Nevada law. Following a thorough analysis of the definition and applicability, Judge William Cobb, a Magistrate Judge for the District Court of Nevada ruled the defendant was allowed to collect interest on the account.
The plaintiff argued that the defendant did not have proper procedures in place to determine the date of last payment — such as requesting copies of the last statement sent by the client to individuals — and thus is not entitled to the bona fide error defense. The defendant had a policy in place of generating a letter that it sends to its clients asking for notification if the client recognizes any error in the accounts that are assigned for collection. As well, the client stipulated in its agreement with the defendant that it would assign accounts only with accurate data. Relying on the information provided by the client was “reasonable,” Judge Cobb ruled, and entitled the defendant to summary judgment, even when it did not move to do so.