Part 1 of this series provided an overview of Florida’s Consumer Collections Practices Act (FCCPA) and explained why it is imperative for all business owners to be aware of, and understand, the FCCPA.  This article explores Section 559.77’s bona fide error defense and how businesses can be prepared to defend against potential FCCPA violations.  Wise business owners will implement policies and safeguards necessary to establish a bona fide error defense.  Investing time upfront to establish and implement policies and procedures to avoid FCCPA violations can save significant time and expense defending against potential FCCPA violations.

The bona fide error defense to FCCPA violations

The FCCPA provides a potential defense to violations of the FCCPA.  See §559.77(3), Fla. Stat. (2019).  Specifically, Section 559.77(3) states:  “A person may not be held liable in any action brought under this section if the person shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid such error.” §559.77(3).

In order to establish this defense, the business has the burden to prove by a preponderance of the evidence (i.e., at least 50.00001%) that: 1) the FCCPA violation was not intentional; 2) that the FCCPA violation resulted from a bona fide error; and 3) that the business maintains procedures reasonably adapted to avoid such error.  §559.77(3).

Applying the bona fide error defense

In analyzing the FCCPA’s bona fide error defense, the Eleventh Circuit recently provided:  “bona fide means that the error resulting in a violation was made in good faith; a genuine mistake, as opposed to a contrived mistake.”  Marchisio v. Carrington Mortg. Servs., LLC, 919 F.3d 1288, 1308 (11th Cir. 2019) (internal citations omitted) (relying upon case law interpreting the FDCPA).  “To be considered a bona fide error, the debt collector’s mistake must be objectively reasonable.”  Id.

The Marchisio Court also provided:  “the procedures component of the bona fide error defense involves a two-step inquiry. . . . The first step is whether the debt collector ‘maintained’—i.e., actually employed or implemented—procedures to avoid errors. . . .  The second step is whether the procedures were ‘reasonably adapted’ to avoid the specific error at issue.  This is a fact-intensive inquiry analyzed on a case-by-case basis.  Marchisio, 919 F.3d at 1308 (citations omitted) (internal quotation marks omitted).

Summary Judgment

While it is beneficial to creditors and debt collectors that the statute provides for a bona fide error defense, obtaining summary judgment on a bona fide error affirmative defense will depend on the facts of each case and may prove to be difficult inasmuch as “intent” and whether procedures were “reasonably adapted” may include issues of fact that are inappropriate for summary judgment.  See, e.g., Marchisio, 919 F.3d at 1308-09 (holding that genuine issues of material fact existed as to whether the creditor maintained procedures reasonably adapted to avoid the FCCPA violation); Castellanos v. Portfolio Recovery Assocs., LLC, 297 F. Supp. 3d 1301, 1320 (S.D. Fla. 2017) (finding that there were genuine issues of material fact as to whether procedures were reasonably adapted to prevent violations of the FDCPA or FCCPA); North Star Capital Acquisitions, LLC v. Krig, 611 F. Supp. 2d 1324, 1337 (M.D. Fla. 2009) (finding that there were genuine issues of material fact as to whether the error was bona fide and providing “intent and whether the error was bona fide are classic issues of fact, inappropriate for resolution on summary judgment”); but see Rhinehart v. CBE Group, Inc., 714 F. Supp. 2d 1183, 1185 (M.D. Fla. 2010) (granting summary judgment in favor of the debt collector on its FDCPA bona fide error affirmative defense);  Berry v. Van Ru Credit, 2:15-cv-150-DN-PMW, 2017 WL 4342072 at *1-2 (D. Utah, Sept. 29, 2017) (granting summary judgment on the debt collector’s FDCPA bona fide error defense and finding that the FDCPA violation was in good faith, genuine and bona fide and the debt collector maintained specific and extensive procedures to avoid such errors); Washington v. Convergent Outsourcing, Inc., No. 15C7043, 2017 WL 1093152 at *3-4 (N.D. Ill., Mar. 23, 2017) (holding that under the FDCPA, a debt collector is entitled to summary judgment in its favor when the undisputed evidence satisfies all three elements of the bona fide error defense and finding that the debt collector was entitled to summary judgment after establishing all three elements of the bona fide error defense) (citing Ross v. RJM Acquisitions Funding LLC, 480 F.3d 493, 496-99 (7th Cir. 2007)).

Establishing, implementing and employing procedures to prevent FCCPA violations

An innocent error can result in an FCCPA violation unless businesses implement reasonable safeguards.  All businesses that engage in the collection of consumer debt should carefully consider the FCCPA’s bona fide error defense and should implement policies and procedures to prevent FCCPA violations in the first place.  If implemented correctly, these procedures can afford a bona fide error defense in the event that an FCCPA violation occurs.

Prudent business owners will consult with competent counsel to analyze the business’s existing debt collection procedures (if any) and establish, implement and employ procedures and a training and maintenance program reasonably adapted to prevent each of the 19 violations prescribed in Section 559.72, Florida Statutes.  The policies and procedures to be implemented will vary by industry and should be evaluated on a case-by-case basis.  See, e.g., Washington v. Convergent Outsourcing, Inc., 2017 WL 1093152 at *3-4 (establishing a bona fide error defense because the debt collector had created and maintained policies and procedures reasonably adapted to avoid FDCPA violations, including: procedures for marking disputed accounts, providing training and testing to employees on the procedures, and performing regular audits to ensure adherence to the procedures).

Investing in policies and procedures reasonably adapted to prevent FCCPA violations can limit a business’s exposure to potential FCCPA violations and can afford a defense in the event of a technical violation of the statute.

Conclusion

FCCPA violations happen.  Even the most prudent businesses will encounter potential FCCPA violations.  However, the best way for businesses to avoid FCCPA violations is to understand the FCCPA and to develop policies and procedures designed to avoid FCCPA violations and which the business can rely upon to establish a bona fide error defense in the event of a technical violation of the statute.

For more on this topic, consider these additional blog articles which have related information:

• Florida’s Consumer Collection Practices Act (FCCPA) Part 1: Understanding the FCCPA
• Debt Collection in Florida: Know the Rules
• Why Associations and Their Managers Need To Be Wary of Debt Collections Practices and Laws