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Debt Collector Makes FDCPA Bona Fide Error Defense, but Loses Case


At our firm, we work hard to hold debt collection companies responsible for violating federal consumer protection laws. The FDCPA bona fide error defense failed to protect a debt collector agency in a recent case. A bona fide error states that the company acted unintentionally in violating federal standards, and has procedures that reasonably try to avoid such violations. However, a recent en banc decision (using a full bench of judges instead of just a few judges on a panel), found a debt collection company liable despite the bona fide error defense.

Understanding the Background of the Case

According to a 1996 court ruling, a debt collection agency must file a lawsuit against a debtor in a judicial district where the debtor lives or where the contract was signed. In the same ruling, the Seventh Circuit Court of Cook County, Illinois found that it was a single district, even though there were multiple municipal districts. Thus, debt collection agencies could file a lawsuit in the Seventh Circuit Court against residents of any municipality of Cook County.

In 2013, a debt collector filed a lawsuit against an individual in the Seventh Circuit Court in compliance with the 1996 court ruling. However, the Seventh Circuit issued an en banc decision in July of 2014 in a different case that overruled the 1996 decision. It said that debt collectors must file a lawsuit in the smallest geographic location that is relevant to the debtor’s place of residency or where the contract was signed. The rule was retroactive, meaning it applied to previous cases.

Under this new rule, the debt collector agency was liable for filing in the wrong district. It should have filed in the Fifth Municipal District in Illinois instead of the Seventh Circuit Court. The debt collection agency, aware of its violation of federal law, immediately dismissed the lawsuit.

Understanding the Subsequent Lawsuit

The debtor then filed a complaint against the debt collection agency, claiming it was liable for filing a lawsuit in the wrong court. The collection agency declared it was innocent by the FDCPA’s bona fide error defense. However, the en banc court decision found the company liable for violating the retroactive law. It issued a 7-4 decision to hold the company responsible.

Atlas Consumer Law Passionately Represents Victims of Unfair Debt Collection Practices

At Atlas Consumer Law, we provide tenacious representation to clients against debt collection agencies and others who violate federal consumer laws. Our compassionate Chicago consumer law attorneys have guided hundreds of clients to successful legal solutions, and we can discuss your options and provide diligent representation from start to finish. If you have been harassed by spam calls or suffered from illegal debt collection practices, our firm can fight to uphold your rights in court.

Contact our office today to schedule a free consultation.