District Court (Mich.) Says Debt Collector Violated FDCPA Even if it Relied on Information from Creditor Where Debt Collector Does Not Rely on “Bona Fide Error” Defense

Northland Group asserts that, because it relied in good faith on Capital One’s information, it did not violate the FDCPA. Because it asserts that it did not violate the FDCPA, Northland Group stresses that it is not relying on a bona fide error defense which allows debt collectors to avoid liability for a violation if it can show the violation was a result of a bona fide error. Northland Group’s argument does not persuade.

A debt collector can violate provisions of the FDCPA, including § 1692e and § 1692f, even if it relies in good faith on the original creditor. The Sixth Circuit, along with others, holds that the FDCPA establishes a strict-liability regime. See Kline v. Mortgage Electronic Registration Systems, Inc., 704 F. App’x 451 (6th Cir. 2017) (“[The FDCPA] is a strict liability statute unless a debt collector can show that the alleged violation was unintentional and resulted from a bona fide error”); Gamby v. Equifax Info. Servs., LLC, 462 F. App’x 552, 556–57 (6th Cir. 2012) (adopting the reasoning for why the FDCPA requires strict liability in finding that the parallel Michigan Collection Practice Act also imposes strict liability); Kistner v. Law Offices of Michael P. Margelesky, LLC, 518 F.3d 433, 438 (6th Cir. 2008) (“[The FDCPA] imposes strict liability for violations. 15 U.S.C. § 1692k(a). An exception to strict liability exists only where a debt collector commits a violation resulting from a ‘bona fide error.’ 15 U.S.C. § 1692k(c).”). Courts have so held because of the statute’s explicit bona fide error defense. See 15 U.S.C. § 1692k(c); Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1175–76 (9th Cir. 2006); Kline, 704 F. App’x at 457. Under the bona fide error defense, a debt collector that violated the statute can avoid liability if it can show that the violation was not intentional and was a result of a bona fide error. 15 U.S.C. § 1692k(c); Kline, 704 F. App’x at 457 n.5. Because Congress included that defense, requiring that a violation itself “be knowing or intentional needlessly renders superfluous § 1692k(c).” Clark, 460 F.3d at 1175–76.

Despite § 1692k(c) and the precedent above, Northland Group maintains that, because it relied in good faith on the information it received from Capital One, it cannot have violated § 1692e and § 1692f of the FDCPA. As support, Northland Group cites Clark, 460 F.3d at 1173–74 and Rudek v. Frederick J. Hanna & Assocs. P.C., No. 08-288, 2009 WL 385804 (E.D. Tenn. Feb. 17, 2009).² But Rudek and the section of Clark that it cited concern what is sufficient for a collection agency to comply with § 1692g. See Clark, 460 F.3d at 1173–74; Rudek, 2009 WL 385804, at *2. Section 1692g concerns what information the collection agency has to provide the consumer if the consumer disputes the debt; it does not concern false or misleading representations or unfair practices. See 15 U.S.C. §§ 1692e and 1692f. Northland Group’s argument that these cases show that good faith reliance on the creditors likewise puts debt collectors in compliance with the rest of the FDCPA rests on a misreading of the cases. See Healy v. TransUnion LLC, No. C09-0956, 2011 WL 1900149, at *8 (W.D. Wash. May 18, 2011) (finding that the very same argument put forth by the defendant was based upon a misreading of Clark, 460 F.3d at 1174); Gonzalez v. Cullimore, No., 20160373, 2018 WL 1057542, at * 6–7 (Utah Feb. 26, 2018) (finding that Bleich v. The Revenue Maximization Grp., Inc., 233 F. Supp.2d 496 (E.D.N.Y. 2002), a case Northland Group relies on, “incorrectly applied § 1692g’s standard to § 1692e—an action the Clark court expressly precluded.”); Clark, 460 F.3d at 1176–77 (explaining that, with respect to § 1692e, “if a debt collector reasonably relies on the debt reported by the creditor, the debt collector will not be liable for any errors” because of the bona fide error affirmative defense and not because the debt collector did not commit a violation of the FDCPA). Because Northland Group’s only argument necessarily confuses what is sufficient to comply with § 1692g with the rest of the statute, it cannot show that it did not violate the FDCPA as a matter of law when it sent Bell a collection letter falsely representing that he owed on a settled Kohl’s debt. And because Northland Group disclaims reliance on the bona fide error defense, the Court cannot find that, in light of the FDCPA’s strict liability standard, Northland Group is not liable for any violations as a matter of law. Northland Group is therefore not entitled to summary judgment.

Northland Group also argues that, because Bell’s FDCPA claims fail as a matter of law, so, too, should Bell’s related MOC claims. (R. 12, PID 68–9.) But because Northland Group’s argument fails as to Bell’s FDCPA claims, it likewise fails for Bell’s related MOC claims. See Millsap v. CCB Credit Servs., Inc., No. 07-11915, 2008 WL 8511691, at *10 (E.D. Mich. Sept. 30, 2008).