KENDRA OWEN v. I. C. SYSTEM, INC.

Summarized by Douglas Bates , Clark, Partington, Hart, Larry, Bond & Stackhouse
15 years 2 months ago

Citation:

Owen v. I.C. System, Inc., 629 F.3d 1263 (11th Cir. 2011)

Tag(s):

11th Circuit

Ruling:

On an issue of first impression, the Eleventh Circuit Court of Appeals, in reviewing the opinion of the District Court granting summary judgment in favor of a debt collector based on the application of the "bona fide error" affirmative defense found in 15 U.S.C. Section 1692k(c), reversed the District Court and found that the subject debt collector failed to maintain "'procedures reasonably adapted to avoid'" errors as required by Section 1692k(c) and thus was unable to invoke the "bona fide error" defense as a matter of law.

Procedural context:

Appeal from the United States District Court for the Northern District of Georgia's order granting summary judgment.

Facts:

The appeal before the 11th Circuit concerned whether a certain debt collector has implemented the appropriate procedures that would allow it to invoke the "bona fide error" defense. While the opinion contains lengthy discussion of the factual background, some of the most salient facts are included here. It is important to note that no dispute existed as to whether the subject debt collector's violations of the Fair Debt Collections Practices Act (FDCPA) were unintentional and bona fide errors. The central focus on appeal was whether or not the debt collector maintained procedures reasonably adapted to avoid the errors at issue. The errors at issue were 1) improper charges of compound interest; and 2) an application of a 7% interest fee. When examining the procedures that were in place, the 11th Circuit found that the debt collector's suspension of collection efforts after the subject debt was contested and delivery of debt verification materials to the debtor subsequent to its initial collection attempt were not "reasonably adapted to avoid" errors. The 11th Circuit found the debt collector's request for the debtor to contact its office in the event the subject debt was disputed was not sufficient when the request came after the debt collector made an initial attempt to collect the subject debt. As the 11th Circuit stated, "[a]t best, this after-the-fact procedure is adapted to prevent the error from occuring again....Congress designed the FDCPA to prevent collection abuses, not to furnish debt collectors with a free pass as to errors in their first collection attempts." Overall, the 11th Circuit found that the most notable fact was that the debt collector failed to present any evidence of training techniques that it employed to foster FDCPA compliance, and that the debt collector failed to provide evidence of any internal, error correction procedures to avoid miscalculations of debt amounts.

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