The U.S Supreme Court has held, this week, that law firms who use improper tactics in attempting to collect a debt cannot defend against lawsuits by debtors who were improperly served by claiming the defense of “legal error.” This is a defense that is available for clerical or factual errors, but would not be extended to mistakes of law, held the Supreme Court.
In this case the firm had sent the debtor a notice belviq class action that her mortgage would be foreclosed unless she disputed the debt in writing. The debtor did what the lawyers asked and disputed the debt in writing. Then she commenced a class action lawsuit against the law firm for violating the Fair Debt Collection Practices Act.
The lower court found that the “in writing” requirement did violate the Fair Debt Collection Practices Act but that the law firm was shielded from liability because it’s conduct was not intentional, resulted from a bona fide error, and despite the law firm’s procedures designed to avoid such errors. On the first appeal, the Sixth Circuit extended the defense of bona fide error to mistakes of law such as the one exhibited here.
But the Supreme Court, J. Sotomayer, held that Congress has been more explicit when it extends the mistake of law defense in a civil liability statute, and that liability under the act was not limited to willful violations.