Be Careful What You Rely On: Washington Court Says Debt Collector’s Reasonable Reliance On Balance Amount From Creditor Not Enough To Avoid FDCPA Violation

In Creager v. Columbia Debt Recovery, a district court judge partially granted plaintiff’s motion for summary judgment, concluding that the debt collector’s attempts to collect an unpaid apartment debt with an balance inflated because the plaintiff had forfeited her security deposit, violated the FDCPA. The information supplied by creditor/client did not protect the debt collector.

Thecase started after plaintiff signed a one-year lease for an apartment but movedout after six months. After moving out, the creditor assigned the account todefendant, seeking to recover the outstanding 6 months of rent. The finalbilling statement from the landlord stated that the security deposit paid byplaintiff when she signed her lease had been forfeited because the tenant hadterminated the lease early. 

Defendantmade several attempts over a period of two years to collect on the debt, duringwhich time plaintiff disputed the forfeiture of the security deposit. After onephone call between plaintiff and defendant, defendant contacted the creditor,and was advised that the security deposit had been properlyforfeited. Plaintiff filed suit in Washington, alleging that the balancedefendant was attempting to collect was inflated by $1,250 - the amount of theforfeited deposit – in violation of the FDCPA and Washington’s ConsumerProtection Act.

Afterdiscovery was completed, the parties filed cross-motions for summary judgment.The trial court granted summaryjudgment in favor of plaintiff, concluding that the strict liability provisionsof the FDCPA made defendant liable for collecting an incorrect balance eventhough defendant had a “reasonable belief” that the amount it was trying tocollect was accurate.  

Defendant argued that there was no liability because of the FDCPA’s bona fide error defense, but the court ruled that the alleged error made by defendant was not related to an interpretation or application of the FDCPA. The court instead said that “even if Defendant’s error were bona fide, Defendant fails to satisfy its burden of demonstrating that it had ‘maintained procedures reasonably adapted to avoid the violation,’” in simply relying on the representation on the validity of the debt from the creditor.

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