Judge Grants MSJ for Defendant in FDCPA Dispute Case Thanks to BFE Defense

A District Court judge in Indiana has granted a defendant’s motion for summary judgment after it was sued for violating the Fair Debt Collection Practices Act because it did not catch a debt that was disputed via fax because the collection agency was entitled to the Bona Fide Error defense.

A copy of the ruling in the case of Webster v. Receivables Performance Management can be accessed by clicking here.

The plaintiff received a collection letter from the defendant in regard to an unpaid satellite TV bill. The letter was not received by the plaintiff because it was sent to an address where she had not lived for several months. About a year later, the plaintiff noticed the debt on her credit report, but thought that the amount owed was incorrect. The plaintiff’s attorney faxed in a dispute to a number that was provided by the defendant and was published on the Nationwide Multistate Licensing System & Registry (NMLS).

The defendant, however, had asked its IT department nine months earlier to remove the fax number from its website and all consumer-facing media. The IT department reported back to the defendant that it had done so, but the fax number was not disconnected and not removed from the NMLS listing. Thus, the dispute was never seen by the defendant and it was unaware of its existence in the fax system until this lawsuit was filed.

While acknowledging that the defendant did, in fact, violate the FDCPA because it did not report the dispute to the credit bureau in a timely manner, Judge Tanya Walton Pratt of the District Court for the Southern District of Indiana, Indianapolis Division, ruled that the defendant met all three prongs of the FDCPA’s Bona Fide Error defense and thus was entitled to summary judgment.

Judge Pratt determined that the fact that RPM did not check the fax machine was not an intentional violation of the FDCPA, that it was a bona fide error, and that the defendant maintained procedures to avoid such errors.

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