Debt collectors seeking to avoid liability under the bona fide error exception of the federal Fair Debt Collection Practices Act (FDCPA) will not be excused from liability if the conduct at issue was intentionally undertaken. That is the ruling from the Seventh Circuit Court of Appeals in Leeb v. Nationwide Credit Corporation.

Mark Leeb received a telephone call and letter from Nationwide seeking payment for an unpaid medical debt.  Leeb wrote Nationwide stating he did not owe the debt because it was payable by his health insurance. He also requested Nationwide provide him verification of the debt under section 1692g(b) of the FDCPA and acknowledge his request.  Leeb’s written request under section 1692g(b) was timely made so no further effort to collect the debt could be taken until the verification was provided.

But before sending Leeb verification of the debt, Nationwide sent him a form letter. The letter acknowledged Leeb’s dispute and asked him to provide additional information about his dispute.

Letter Was an Attempt to Collect a Debt Regardless of What Leeb Believed

Nationwide argued its letter was not an effort to collect the debt because it was made in response to Leeb’s request to acknowledge his dispute. Nationwide also contended that because Leeb believed he did not owe the debt, he understood the letter was not an attempt to collect a debt.

But the trial and appellate courts found that the letter also included three statements, which ultimately led to Nationwide’s demise. First, it listed a “balance” of $327. Second, it instructed Leeb to: “Detach the Upper Portion and Return With Payment.” Finally, it stated, “[t]his communication is from a debt collector attempting to collect a debt and any information obtained will be used for that purpose.”

Leeb’s subjective understanding of the letter, the court wrote, does not control whether the letter was an attempt to collect in violation of section 1692g(b). Rather, whether a letter is made to collect a debt is determined objectively from the letter’s content. Here, the letter listed a balance, provided instructions for payment of the balance and stated it was an attempt to collect a debt. And, the only relationship Leeb had with Nationwide, the court noted, was concerning that debt.

Bona Fide Error

The FDCPA will not impose liability on a debt collector where it can show “by a preponderance of the evidence” that the violation was 1) not intentional, 2) resulted from a bona fide error, and 3) the error occurred despite the debt collector having procedures “reasonably adapted” to avoid the error.

The issue here was the meaning of “not intentional.” Nationwide contended it should escape liability because it did not intend to violate the FDCPA by sending the letter.

The trial and appellate courts read “not intentional” to have two meanings. Not only must a debt collector demonstrate it did not willfully intend to violate the FDCPA, but it also requires that the conduct which is the basis for the FDCPA was not intentional. This second element follows the U.S. Supreme Court’s 2010 decision in Jerman v. Carlisle, which limited the bona fide error exception to clerical mistakes (rejecting mistakes of FDCPA law).  It is this second prong that lost the day for Nationwide and likely constrains the bona fide error defense in the Seventh Circuit. According to the decision, Nationwide intended to send the offending letter and it did not commit a “clerical error” by sending it.

Important to this analysis is that Nationwide did not assert it was “unaware of all of the contents” of the letter. The court may have given Nationwide a pass if it had sent the wrong form letter as a result of a clerical error, not realizing the letter stated a balance, provided instructions for payment and indicated it was an attempt to collect a debt.