FDCPA: Odsather v. Fay Servicing, LLC

A noteworthy Fair Credit Reporting Act opinion came out of the Western District of Washington in late December.  In it, the consumers alleged:

Plaintiffs filed this lawsuit alleging that Defendant violated the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b), the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692a, 1692e, 1692f, the Washington Collection Agency Act, Revised Code of Washington § 19.16.100, and the Washington Consumer Protection Act, Revised Code of Washington § 19.86.[3] (Dkt. No. 1-3, 11-17.) In this motion for partial summary judgment, Plaintiffs ask the Court to find Defendant liable for violating a single FDCPA provision. (Dkt. No. 34 at 1.) Plaintiffs assert that Defendant violated 15 U.S.C. § 1692e(8) by failing to communicate to Transunion and Equifax that Plaintiffs disputed their debt. (Id. at 8.) Defendant argues that any reporting failure on its part was a bona fide error, which is exempted from liability under the FDCPA. (Dkt. No. 35 at 3.)

The Court found:

The evidence demonstrates that Defendant, both in policy and in practice, does not report verbal disputes to credit bureaus until it first verifies that the dispute is valid. But the FDCPA does not allow debt collectors to subjectively decide whether they should report that a debt is disputed—the statute makes it illegal for a debt collector to fail “to communicate that a disputed debt is disputed.” 15 U.S.C. § 1692e(8). Moreover, Defendant’s assertion that a debtor’s verbal dispute should be treated differently than a written dispute is in direct conflict with Ninth Circuit case law holding the opposite. See Camacho, 430 F.3d at 1082. For those reasons, Defendant’s failure to report Plaintiffs’ dispute is not a bona fide error, but the exact kind of mistaken legal interpretation that is not protected by the defense. See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 587 (2010) (holding that the bona fide error defense does not apply “to a violation resulting from a debt collector’s mistaken interpretation of the legal requirements of the FDCPA.”). Nor are Defendant’s procedures regarding the reporting of verbal debt disputes “reasonably adapted” to avoid errors—if anything, they are reasonably adapted to violate the FDCPA.