The case was called Jerman v. Carlisle. And it started when a collection law firm sent a consumer a letter stating that any dispute about the alleged debt must be in writing. Various courts split on the issue, with the majority finding that disputing a debt orally was fine. The collectors chose to ignore those decisions and moved forward with its "in writing" requirement, even though the Fair Debt Collection Practices Act (FDCPA) contains no such provision.
Birmingham consumer lawyer John Watts explains what happened next:
So the consumer sued. The trial court held the requirement of disputes being in writing violated the FDCPA.
But, the court ruled this was a "bona fide error" which means the law was violated but the collection law firm did not mean to violate the law and had reasonable procedures in place to ensure violations did not occur.
An appeal was taken and the appellate court ruled that this bona fide error defense applied to "mistakes of law." This caused a huge controversy as now collectors could violate the law and say, "Oh, well we misunderstood the law so don't hold us liable," even though that doesn't work in any other context. (Try telling a police officer you didn't know what the speed limit was or what a stop sign means. On second thought--don't say that to the guy that can arrest you!)
What happened next? Watts reports:
The US Supreme Court accepted this case and said everyone has to follow the law and is responsible for knowing what the law is . . . no free passes for debt collectors. Here is part of the reason the Court said this: "Moreover, many debt collectors are compensated with a percentage of money recovered, and so will have a financial incentive to press the boundaries of the Act's prohibitions on collection techniques."
You might want to read that section in bold again. That says an awful lot about what is wrong with the debt-collection process in America.
You can click here to read the opinion. It's long, but we think it's worthwhile reading, particularly for the dissent from conservative stalwarts Anthony Kennedy and Samuel Alito. It shows you just how far these guys will go to protect those who use deceptive and illegal business practices. As Watts states:
If you are dealing with debt collectors, or if you just want to read an opinion from the US Supreme Court, this is a good one.
It even has some nice fighting between the court members, with two members of the court disagreeing strongly with the majority's decision. Thankfully these two guys didn't get to decide this case or they would want you to NOT be able to sue when a collector breaks the law. . . . Get you some popcorn, something good to drink, and get in your civics lesson on the court system and Congress.