Judge Grants MSJ for Defendant in FDCPA Case Over Disputed Debt

A District Court judge in Georgia has granted a defendant’s motion for summary judgment, ruling that it was entitled to the Fair Debt Collection Practices Act’s bona fide error defense after a plaintiff disputed a debt that was not marked as disputed on the plaintiff’s credit report.

A copy of the ruling in the case of Pharms v. National Credit Systems can be accessed by clicking here.

The plaintiff was contacted by the defendant in regards to a debt owed to an apartment owner for $531. The plaintiff sent a one-sentence letter to the defendant — I dispute the above accounts that you are reporting on my credit files — and the defendant marked the account as disputed. The plaintiff said he never received a validation letter and, two months later, checked his credit report on Credit Karma to see that the debt was not marked as disputed.

The plaintiff filed suit, alleging the defendant violated Section 1692e(8) of the FDCPA by failing to communicate that the debt was disputed.

After a lengthy explanation of why the plaintiff had standing to file his lawsuit, and addressing the defendant’s arguments that a “Karma Report” from Credit Karma is not the same as a credit report, Chief Judge J. Randal Hall of the District Court for the Southern District of Georgia turned to the defendant’s argument that it was entitled to the FDCPA’s bona fide error defense.

The defendant first submitted the sworn testimony of its vice president of operations, noting that the account was flagged as disputed, showing that any error was unintentional. The defendant also submitted records indicating that it marked the account as disputed, that it never undertook any subsequent collection activities, or changed or altered the disputed notation on the plaintiff’s account.

Judge Hall determined that the defendant’s policies and procedures were such that a jury would not “find any misdeed of Defendant’s to be more than an objectively reasonable mistake, including a computer error that occurred without Defendant’s knowledge. … This evidence shows that Defendant maintained and implemented procedures to avoid errors, including the specific error alleged in this case: reporting a disputed debt as undisputed to the credit bureaus. This satisfies both steps of the procedures prong. Although Defendant cannot explain why the debt was allegedly not marked as disputed to Trans Union, it has provided undisputed evidence that its regular procedure includes marking accounts ‘disputed’ with the credit bureaus and continuing to do so even after verifying the debt.”

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