ROSS v. RJM ACQUISITIONS FUNDING LLC, USCA-7 No. 06-2059, 2007 U.S.App. LEXIS 5759, on appeal from USDC-ILND, before USCJs Posner, Ripple, Williams, opinion by Posner, filed 13 Mar 2007.
LONG STORY SHORT: Debt buyer/collector's computer bankruptcy search did not discover the consumer's bankruptcy under a different name and neither did the prior collection agency notify it; consequently, the attempt to collect the debt from the consumer in violation of FDCPA was a bona fide error. Binding in IL, IN, WI.
FACTS: Plaintiff owed $574.72 to Federated Department Stores and could not repay it. Federated sold it to RJM Acquisitions Funding LLS as part of a large portfolio of bad debt. RJM assigned its affiliate Plaza Associates to collect Plaintiff's debt from "Lisa Ross." Plaintiff petitioned for bankruptcy protection under her full name "Delisa Ross" and listed Plaza Associates on her bankruptcy schedules, but misnamed RJM as RMA; neither did she list "Lisa Ross" as an alias. Plaza learned of the BK and returned the account to RJM without correcting Plaintiff's name or notifying RJM of the BK. Plaintiff received full discharge of the debt, but several months later, RJM mailed her two dunning letters seeking to collect the debt. Just before doing so, RJM searched for bankruptcies under the name "Lisa Ross," which did not pick up Plaintiff's BK in the name "Delisa Ross." Plaintiff's counsel told RJM that the debt was discharged, and RJM immediately ceased all collection efforts.
PROCEDURE: Plaintiff sued RJM in U.S. District Court for the Northern District of Illinois per 15 U.S.C. § 1692e(2)(A), which forbids a debt collector's false representation of the character, amount, or legal status of a debt. RJM moved for summary judgment, arguing that the 15 U.S.C. § 1692k(c) bona fide error defense applied because RJM had followed reasonable procedures designed to prevent dunning bankrupts. The trial court agreed that RJM's error was bona fide and it should not be liable. SUMMARY JUDGMENT GRANTED. Plaintiff appealed to the U.S. Court of Appeals for the Seventh Circuit.
DECISION: Trying to collect a debt discharged in bankruptcy is one of the many ways a collector can misrepresent the character, amount, or legal status of a debt. FDCPA is a strict liability consumer protection statute and violations of it need not be intentional to entitle a consumer to damages. The only way for a collector to save itself is to show that the violation was unintentional and occurred despite procedures reasonably designed to prevent errors.
RJM qualified for this defense. Plaintiff made the principal error in the first place, by not listing aliases on her bankruptcy schedules. If she had fulfilled this basic duty, RJM could have found her and would not have dunned her. RJM could not reasonably have found Plaintiff's full name by searching her short name. The Seventh Circuit tried itself to find "Delisa Ross" by entering "Lisa Ross" on search engines, but received no suggestions such as "do you mean Delisa Ross?" A credit report would have shown Plaintiff's BK discharge, but ordering a credit report for every debtor is prohibitively expensive and not reasonable to require for FDCPA compliance. Under these facts, Plaintiff's appeal was not far from frivolous. AFFIRMED in all respects.
EDITORIAL: I see the point, I'm afraid. Judge Posner has on numerous occasions ripped scofflaw collectors a new one, but is equally protective of collectors who did not break the law or tried their best not to. I am no fan of RJM Acquisitions, not least because they bought the entire Camco portfolio, and Camco was the Medellin Cartel of debt collection. But here, RJM didn't buy a toxic waste pool of fictitious debts like they did from Camco, and their own Plaza Associates let them down. Maybe RJM is wising up.
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