The old adage, “ignorance of the law is no excuse,” has been underscored in the context of debt collection practices in a recent decision issued by the United States Supreme Court. In Jerman v. Carlisle (2010 WL 1558977 U.S.), the Court held that the “bona fide error” defense to civil liability under the Fair Debt Collection Practices Act (“FDCPA”) has no application to mistakes of law. The decision resolves a split within the District Courts that have addressed the issue.
The mistake committed by the creditor’s attorney in Jerman, was relatively subtle. In a statutorily-required communication with the debtor, the attorney advised the debtor that the debt would be presumed valid unless the debtor disputed the debt in writing. The FDCPA, however, contains no such in writing requirement. It mattered not whether the addition of the in writing language was inadvertent or intentional – it was a mistake of law insofar as it constituted a misinterpretation of the statute by the creditor’s attorney.
In reaching its decision, the Court strictly construed the statute, and invited Congress to address whether the FDCPA should be amended to provide enhanced safeguards for creditors and their attorneys. Such action is unlikely to happen any time soon, however, so for the foreseeable future, attorneys representing creditors are advised to exercise the utmost caution, and closely scrutinize and understand all provisions of the FDCPA in order to avoid the prospect of liability, (with attorney’s fees and enhanced damages).