Deeming the Tracking of a Debtor’s Every Move “Impractical,” District Court Finds a Bona Fide Error and Dismisses FDCPA Action Against Law Firm

A district court has dismissed an FDCPA action based on a bona fide error after reviewing the collection firm’s extensive pre-suit procedures and determining they were reasonably calculated to avoid any errors. Guynn v. Blatt, Hasenmiller, Liebsker & Moore, LLC, 2018 U.S. Dist. LEXIS 43032 (S.D. Ind. March 14, 2018).   

In 2006, Mr. Guynn, opened a personal credit card with Bank of America. A few years later, he purchased a home in Indianapolis, Marion County, Indiana, and lived there full time until he was transferred by his employer to a job in Edwardsville, Illinois in 2014. Due to the transfer, Guynn moved out of the property, but continued to own it, and arranged for his mail to be delivered to a P.O. Box in Marion County, Indiana.

Guynn defaulted on his Bank of America credit card in 2013, and in 2016 the account was referred to a law firm for collection. Two initial notices were sent to Mr. Guynn (one by defendant's predecessor in interest and one by defendant) and after receiving no response, defendant filed a collection suit in Marion County, Indiana.  In response to the debt collection action, Guynn filed this suit, alleging the law firm violated of § 1692i of the FDCPA because the suit was filed in Indiana rather than in Illinois where he was currently residing for his job. As an affirmative defense, the law firm asserted bona fide error. 

 

Policies and Procedures Implemented to Insure Compliance with the FDCPA

In support of its bona fide error defense, the law firm submitted its policies and procedures regarding its pre-suit procedures. 

Initial Demand 

After receiving an electronic download of the account, the law firm employed a “multi-step process to ensure compliance with” the FDCPA, including;

·     Utilizing an electronic interface to receive new case information and to store it directly onto its database, eliminating the possibility of clerical mistakes;

·     Sending the information to its Data Operations Department, which was responsible for drafting initial written notice letters; and

·     Requiring its attorneys to:

o   review and compare the information in the initial written notice with the information in the electronic download,

o      review the account’s scrub history,

o      review the account for disputes,

o      confirm the consumer was not represented by counsel, and

o      verify the listed address against the information in the firm’s system.

Pre-Suit Review

Prior to filing suit, the law firm employed a checklist to ensure that all FDCPA requirements had been met. Specifically, the law firm:

·     Verified that the PO Box was the consumer’s address of record,

·     Reviewed the County assessor’s website and property records to verify the consumer owned the Indiana real estate,

·     Verified the Indiana property was listed on Guynn’s Bank of America statements and most recent Change of Terms, and

·   Verified that through the US Postal Service that the PO Box still belonged to the consumer.

The Court’s Decision

Without reaching the question of where Guynn “resided”, the court found that any failure by the law firm to file the collection action in the proper venue was a result of a § 1692k(c) bona fide error.

In so finding, the court keyed in on a number of facts, including:

      

·    The law firm never received any information indicating that Guynn moved outside of Marion County;

·       Neither of the two letters sent to the P.O. Box were returned as undeliverable;

·     The law firm’s pre-suit investigation confirmed that Guynn still owned the Indiana Property; and

·        The law firm’s investigation also confirmed that the PO Box was registered to Guynn.

Moreover, the court noted, the law firm “could not find any connection between Guynn and Edwardsville, Illinois during the relevant times even after filing the Debt Action,” and as such, the court found any violation of § 1692i to be a “genuine, unintentional mistake.”

Guynn argued that the law firm failed to employ sufficient procedures to ensure that the collection action was filed in the correct venue, suggesting the law firm could have called him, sent a letter to the P.O. Box requesting his current address, or hired a private process server to confirm his residence. The court turned away these suggestions, noting that the FDCPA “does not require debt collectors to take every conceivable precaution to avoid errors,” but rather only requires “reasonable” procedures. “In fact,” the court surmised, “given the current economic climate in which businesses often demand greater fluidity from their employees in terms of travel and temporary relocation, it would be impractical to require debt collectors to track each debtor’s locations in order and to know where debtors, like Guynn, may be temporarily living at any given time.”  Id. at *16-17. Instead, the court found that the law firm took reasonable steps prior to filing suit to ensure compliance with §1692i, specifically noting the following:

(1) reviewing all of the information it received from Bank of America regarding Guynn's credit card account, including Guynn's address of record, billing statements, and most recent Notice of Change in Account Terms documentation; (2) utilizing RevSpring (a third party letter vendor) and the NCOA database to determine Guynn's proper address; and (3) researching Guynn's current property ownership information through the Marion County Assessor's website and the Indiana Property Record Cards.

Id.  

Application of Guynn

Guynn is a thorough and well-reasoned opinion regarding bona fide errors in collection lawsuits. The opinion also recognizes the difficulty – and impracticality – of tracking a transient debtor’s every move before filing a collection lawsuit. We recommend that collection firms look to Guynn as a representative example of the kind of policies and procedures that will pass FDCPA bona fide error defense muster.