Debt collectors, especially those dealing with high volumes of accounts, inevitably face the issue of a debtor having the same name as an unrelated third-party. The Fair Debt Collection Practices Act (FDCPA) provides a defense to a debt collector that unintentionally violates the statute despite having reasonable policies and procedures in place to prevent such violation. In Ali v. Portfolio Recovery Associates, LLC et al., No. 15-CV-6178 (N.D. Ill. Sept. 30, 2018), the Northern District of Illinois reviewed whether a debt collector was entitled to summary judgment on the bona fide error defense in a situation where it served a wrong party who had the same name as the consumer. While the court's opinion dealt with several issues, this article will focus on the bona fide error defense.
Factual and Procedural Background
Portfolio Recovery Associates, LLC (PRA) purchased a debt that was owed by an individual named “Syed H. Ali” who was born in 1972, whose social security number ended in 8783, and who resided at an address in Moore, Texas.
While attempting to collect on this account, PRA sent collection letters to the Moore, Texas address that came with the account. The consumer never responded and none of the letters came back as undeliverable. Next, PRA attempted to send letters to a Houston, Texas address associated with the account. One of these letters came back to PRA with a note stating “MOVE, NO FORWARD.” Finally, PRA attempted to contact the consumer by sending letters to at an Aurora, Illinois address that it obtained through Experian and an internal legal resource. Once again, the consumer did not contact PRA nor were any of these letters returned.
PRA referred the account to its legal collections team. Prior to approving collections litigation, PRA’s attorneys reviewed the account to ensure that: the account was within the statute of limitations; the account was not disputed or in bankruptcy; the consumer is not a minor, over 65, or active duty military; and the account was not in an active pay status.
Once the account was approved, PRA’s attorneys commenced a collections lawsuit and attempted service on the consumer at the Aurora, Illinois address. After five unsuccessful attempts at service, the father of a minor with the same name -- including middle initial -- as the debtor (SHA) accepted service.
The father retained an attorney to represent SHA in the collections action. When the attorney contacted PRA’s counsel to discuss the lawsuit, it became evident that the lawsuit was filed against the incorrect person because the birth year and social security number did not match. The following day, PRA dismissed the collections lawsuit.
SHA’s parents filed an FDCPA lawsuit on his behalf against PRA for what occured. Both parties filed motions for summary judgment.
While the court acknowledged that PRA had many procedures in place to ensure they were collecting from the correct person, it denied PRA’s motion for summary judgment on the issue.
Editor’s Note: Of importance here is the legal standard for granting a motion for summary judgment. The court will grant a summary judgment if the undisputed facts viewed in the light most favorable to the non-moving party show that the moving party is entitled to judgment as a matter of law. A denial of a summary judgment motion does not mean that the moving party lost the case; it simply means that there is some issue of fact that is disputed and is more appropriate to be reviewed in the context of a trial.
The underlying error, according to the court, was that PRA attempted collection efforts and “served the collections complaint at an address where another person bearing the same name (including middle initial) lived.”
The court acknowledged certains facts supporting that PRA “reasonably believed the [consumer] likely lived there and unintentionally violated [the] FDCPA when [it] sent the summons to the address in good faith.” The supporting facts include:
- PRA received the Aurora, Illinois address from multiple sources.
- PRA attempted to verify this address by placing calls and sending letters.
- The letters sent to the Aurora address were not returned as undeliverable.
- Nobody contacted PRA about not being the debtor until after the suit was filed.
The court also acknowledged that PRA presented evidence of procedures specifically intended to avoid suing and serving a person at the wrong address. These procedures included placing calls, sending letters, and reviewing accounts prior to commencing litigation.
However, even with all of the above, the court denied PRA’s motion for summary judgment because “the fact that another 'Syed H. Ali' lived at the same address associated with the Debtor raises a triable issue about whether the protocols in place were sufficiently construed to avoid incorrect service.”
Considering the facts above, it is hard to imagine what else a debt collector can do to ensure they are communicating with the correct person when their efforts are met with radio silence. For a consumer that has an identical name as a third party, the best way to ensure that the debt collector is attempting to communicate with the right party is by verifying personal information such as date of birth or social security number -- how is a debt collector to do that when none of their communication attempts are being answered?
This is a great example of how communicating with, rather than avoiding, a debt collector can be helpful. As soon as someone engaged with PRA -- here, SHA's attorney after the suit was filed -- and verified that SHA was not the consumer that PRA was trying to reach, PRA dismissed the lawsuit. Had someone contacted and verified with PRA that it was attempting to reach the wrong person, the collections lawsuit could have been avoided altogether.