FDCPA Case Heard by Supreme Court

The U.S. Supreme Court heard oral argument yesterday in an FDCPA case (for the first time since 1995).  The case is a direct challenge to a certain type of bona fide error defense under the Fair Debt Collection Practices Act.  As issue is whether a debt collector’s legal error qualifies for the bona fide error defense under the FDCPA.  The case, Karen L. Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, LPA and Adrienne S. Foster, could have far reaching effects.

Jerman sued Carlisle, McNellie, Rini, Kramer & Ulrich for violating the FDCPA when it attempted to foreclose on her home. The firm required that Jerman prove in writing within 30 days that she had paid her mortgage; otherwise the debt would be assumed valid. However, the FDCPA law does not require consumers to challenge debt claims in writing.

The firm admitted that in its validation notice to Jerman it intended to require she dispute the claim in writing. But the law firm said it did not know that the FDCPA did not require a written dispute. After Jerman sued, the firm argued that it should not be held liable because it was an unintentional or “bona fide error” and has safe harbor protection under FDCPA.

Jerman’s lawyers have asked the court to decide if a debt collector’s legal error qualifies for the bona fide error defense under FDCPA. They contend it does not and want the court to conclude that the bona fide error defense is “categorically unavailable for any mistake of law.”

A PDF of the transcript of the oral argument is available on the Supreme Court’s website:  http://ow.ly/16ldHV