Debt Collector Wins on Bona Fide Error Defense Where Dispute Letter Too Vague

Here’s a bit of good news in an otherwise chaotic week for the accounts receivable industry: On April 13, 2021, in the case of Anderson v. I.C. System, Inc., 3:20-cv-00263 (W.D. Wis. April 13, 2021), a district court granted summary judgment in a debt collector’s favor on a bona fide error defense. Before you say, ‘this is just a district court case, why should I care in light of all of the other things-which-will-not-be-named going on this week?’… a positive case is a positive case, and this particular case covers a situation likely familiar to any entity which is credit reporting.

In the Anderson case, I.C. System received a letter from a consumer’s attorney, which referred to Charles D. Anderson and Carol Ann Hamblin and provided their social security numbers and address. According to the Court, the letter was ‘vague,’ as it did not list the actual accounts in dispute. Instead, the letter stated it was to serve as “written notice that the above referenced individual(s) is in fact and in law represented by this office for all debts that he or she may have” and “the above referenced individual(s) dispute the debt which you are attempting to collect.”  The letter did not include any additional information.

Using the information provided in the letter, I.C. System found two accounts for Ms. Hamblin; however, none of the 600 accounts tied to a “Charles Anderson” matched the address or social security number provided in the letter. Unfortunately, one of those 600 accounts did belong to the correct Mr. Anderson. Mr. Anderson filed a lawsuit claiming I.C. System violated the FDCPA when it failed to report the dispute. I.C. System defended the lawsuit by claiming the failure to report the dispute resulted from a bona fide error.