In the case Edwards v. Niagara Credit Solutions Inc., debtor Brenda Edwards owed money to creditor Consumer Shopping Network. The creditor retained Niagara Credit Solutions, a collection agency, to recoup the money owed by Edwards. A collection agency calls and writes debtors to collect debts, and is governed by the Fair Debt Collection Practices Act (FDCPA).

Niagara Credit Solutions made more than 12 calls to Edwards over a four-month period, leaving voice messages when she failed to answer. Each message stated the debtor’s name, the name of the individual calling, the phone number to which the return call should be made and an account number to reference.

In the case Edwards v. Niagara Credit Solutions Inc., debtor Brenda Edwards owed money to creditor Consumer Shopping Network. The creditor retained Niagara Credit Solutions, a collection agency, to recoup the money owed by Edwards. A collection agency calls and writes debtors to collect debts, and is governed by the Fair Debt Collection Practices Act (FDCPA).

Niagara Credit Solutions was found to have made more than 12 calls to Edwards over a four-month period, leaving voice messages when she failed to answer. Each message stated the debtor’s name, the name of the individual calling, the phone number to which the return call should be made and an account number to reference.

The court found that not one of the messages mentioned that the call was being made by a debt collector, nor did they mention the collection agency’s name. Niagara’s policy was to not mention debt collection in voicemail messages, lest the message be picked up by a third party.

The FDCPA requires that all collection agency communications expressly state that they are being made in an effort to collect a debt. Niagara was found to be aware of this requirement and expressly chose not to comply therewith, when leaving voice messages, in an effort to avoid violating the FDCPA’s prohibition on communicating with third parties about the debtor’s situation.

At trial, the district court found in favor of Edwards, ruling that the collection agency’s messages violated the FDCPA. On appeal, Niagara acknowledged the violation, but asserted the bona fide error defense, posing the issue to the Court of Appeals of "whether a debt collector is entitled to the bona fide error defense when it intentionally violates one provision of the Act in order to avoid the risk of violating another provision."

The Court of Appeals explained that while the FDCPA was enacted to protect consumers against abusive debt-collection practices, it also provides a bona fide error defense. The defense renders a collection agency that has violated the FDCPA not liable if it can show that the violation met each of the following criteria:

  • "(1) (it) was not intentional;
  • (2) (it) was a bona fide error; and
  • (3) (it) occurred despite the maintenance of procedures reasonably adapted to avoid any such error."

Niagara acknowledged that its violation was intentional, so it did not meet the first requirement of the bona fide error defense, the Court of Appeals found. Neither did it meet the second element: a bona fide error indicates an error that is objectively reasonable.

The appellate court ruled that it would be more reasonable to interpret the FDCPA as not guaranteeing a collector the right to leave messages on an answering machine than to interpret it to require one of the Act’s provisions to be violated in order to avoid violating another.

Accordingly, the Court of Appeals found that the collection agency’s violation of the FDCPA by not identifying itself as a collection agency in voicemail messages left for a debtor were not excused by the bona fide error defense. The lower court’s ruling was upheld.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.

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