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7th Cir. Rules Dispute Sent Through Wrong Channel Gave Rise to Valid FDCPA ‘Bona Fide’ Error Defense

fdcpaThe U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court’s summary judgment ruling in favor of a debt collector asserting a bona fide error defense to an action under the federal Fair Debt Collection Practices Act.

Here, the debtor disputed the debt by emailing two officers of the debt collector company, and not by following the dispute procedures described in the written instructions provided by mail to the debtor.

A copy of the opinion in Ross v. Financial Asset Management Systems is available at:  Link to Opinion.

A debtor defaulted on a debt then later married his spouse. The debtor and spouse shared a phone plan and office. In an attempt to collect the debt, a debt collection company initially mailed the debtor a letter. The debtor did not follow the dispute process as outlined in the letter and separately emailed the chief executive officer and vice president of operations of the collection company to dispute the debt.

The officers of the company did not recall seeing the debtor’s dispute email. As a result, the company took no action to address the debtor’s dispute letter. Therefore, the company did not follow its standard policy of stopping collection activity and proceeded to contact the debtor’s spouse via telephone. The company contacted the debtor’s spouse 12 times in an attempt to reach the debtor to collect the debt.

The debtor’s spouse (“plaintiff”) ultimately sued the debt collector (“defendant”) alleging the calls violated the FDCPA, 15 U.S.C. § 1692 et seq. The plaintiff asserted the defendant violated § 1692g(b) by continuing debt collection activities after the debtor disputed the debt and without first providing verification of the debt. The plaintiff further alleged the defendant violated § 1692d and 1692d(5) because (1) the defendant continued to call the plaintiff after the debtor disputed the debt, (2) the defendant continued to call the plaintiff after she notified the defendant that she does not use her phone, and (3) the defendant disconnected calls with the plaintiff after she answered. 

The plaintiff alleged that the 12 unwanted phone calls were illegal and caused her to experience stress, which physically manifested in crying and difficulty sleeping. The plaintiff and defendant both moved for summary judgment. The trial court held the plaintiff could not bring a claim under § 1692g(b) because she is not a “consumer” for the purposes of that provision. The trial court also concluded that a reasonable jury could not infer that the defendant violated § 1692d and 1692d (5), and even if it could, the trial court found that the defendant would prevail under the affirmative defense of bona fide error under § 1692k(c). The plaintiff appealed.

On appeal, the plaintiff argued that the trial court erred by finding that she was not a “consumer” under 15 U.S.C. § 1692g(b). As you may recall, the statute provides that if the consumer notifies the debt collector in writing that the debt is disputed within 30 days after receipt of the notice, the debt collector must cease collection of the debt until the debt collector mails verification to the consumer.

Here, the Seventh Circuit assumed, without deciding, that the plaintiff has a cause of action in order that it could address the merits of the trial court’s decision addressing the defendant’s bona fide error defense. See Knopick v. Jayco, Inc., 895 F.3d 525, 529–30 (7th Cir. 2018); Dunnet Bay Constr. Co. v. Borggren, 799 F.3d 676, 689 (7th Cir. 2015).

The bona fide error defense requires a debt collector to show that (1) the violation was not intentional, (2) the violation resulted from a bona fide error, and (3) the debt collector maintained procedures reasonably adapted to avoid any such error. Kort v. Diversified Collection Servs., Inc., 394 F.3d 530, 537 (7th Cir. 2005).

Notably, this defense does “not require debt collectors to take every conceivable precaution to avoid errors; rather, it only requires reasonable precaution.” Kort, 394 F.3d at 539; see also Hyman v. Tate, 362 F.3d 965, 968 (7th Cir. 2004).

The plaintiff did not properly dispute the first two elements, and the only question concerned the third element — that is, whether or not the defendant maintained procedures that were “reasonably adapted” to avoid any such error.

The plaintiff argued they did not because the vice president of operations’ deleted e-mail showed that the defendant did not maintain procedures reasonably adapted to avoid the error and did not have procedures to detect deviations from the prescribed dispute procedures. The plaintiff’s argument relied on the case of Morris v. Choice Recovery, Inc., No. 18-cv-05548, 2020 WL 6381926 (N.D. Ill. Oct. 30, 2020). In Morris, the plaintiff faxed a dispute to the administrative team in charge of forwarding all disputes to a particular individual who logged the disputes in an internal database. 

However, the record on appeal showed that training was not the only procedure the defendant had in place, and the type of error here was different than Morris because the defendant set up specific procedures to dispute a debt. Additionally, the defendant mailed a letter with instructions to dispute a debt that directs consumers to its website or standard mailing address and sought to avoid communications to corporate officers whose day-to-day duties seldom include consumer communications.

Notably, in emailing the CEO and VP of operations, the debtor circumvented the defendant’s instructions for how to dispute his debt outlined in the letter. Specifically, the debtor pulled a Massachusetts registration document to uncover the email addresses of the defendant’s employees. Although the officers of the company receive training to forward dispute emails to its client services department, they are normally not involved in day-to-day communications with debtors.

Moreover, unlike Morris where the plaintiff properly disputed the debt and the error occurred while executing a routine procedure, the plaintiff here invented an alternative channel to dispute the debt and thus no one at the debt collector company noticed the dispute, which would have started its procedure. 

As a result, the Seventh Circuit held that the defendant took reasonable steps to avoid the bona fide errors caused by the debtor’s behavior, and even assuming the plaintiff is a “consumer” under § 1692g(b) and that the defendant violated that provision, the bona fide error defense shields the defendant from liability under § 1692g(b).

Next, the plaintiff argued the trial court erred by finding that a reasonable jury could not infer that the defendant intended to annoy the plaintiff, in contravention of 15 U.S.C. § 1692d. Section 1692d provides: “A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.”

The Seventh Circuit dismissed this argument and noted that same facts and logic shield the defendant from liability through the bona fide error defense because if the defendant’s procedures had been followed, the plaintiff’s number would have been immediately placed on a do-not-call list. Therefore, the plaintiff would not have continued to receive calls and the plaintiff ultimately complied with the requirements of the bona fide error defense.

Lastly, the plaintiff argued that the defendant intended to annoy her by calling and then hanging up on her twice, in violation of § 1692d (5). The Seventh Circuit rejected this argument based on the bona fide error defense because the defendant had policies and procedures that should have prevented these calls from going out to the plaintiff in the first place.

Accordingly, the Seventh Circuit affirmed the trial court’s grant of summary judgment in favor of the defendant debt collector.

Photo: MclittleStock/

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Jake VanAusdall is Senior Counsel in the Nashville office of Maurice Wutscher LLP. He practices in the firm’s Consumer Credit Litigation and Commercial Litigation groups predominantly representing financial institutions. Jake also has substantial litigation experience representing clients involved in intellectual property, construction, contract, and business disputes. Jake has been recognized as a “Mid-South Super Lawyers – Rising Star” in the area of Business Litigation (2018-2022), and is a former member of the Tennessee John Marshall American Inn of Court. For more information, see

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