The Southern District of New York just issued an interesting ruling in Rafael Lee v. Kucker & Bruh, LLP on August 2, 2013 when it considered a violation of the Fair Debt Collections Practices Act.  The action was brought by an 82-year old man who was residing in a rent controlled apartment in New York City.  Under certain New York State law (Senior Citizen Rent Increase Exemption "SCRIE") for lower income residents, he was only responsible for a portion of the rent while the landlord received a tax abatement equal to the balance.  Under this law, landlords are not permitted to collect any rent or other charges (including fuel charges) from a tenant beyond the amount permitted under the law.

In this case, a private social security agency that provided assistance to elderly tenants paid Mr. Lee’s portion of the rent to the landlord.  This was all spelled out in Mr. Lee’s SCRIE order.  Notwithstanding this payment, the landlord forwarded to his attorney documents which showed that Mr. Lee was delinquent in his monthly payments. Based upon this information, the attorney sent out the appropriate demand/delinquent notice to Mr. Lee demanding payment. Mr. Lee then retained counsel who disputed the debt and requested validation, which the attorney’s office provided without seeking additional information from the landlord and his agents (the property management company).  

Once the law firm learned of Mr. Lee’s SCRIE order and status, they quickly and promptly dismissed the eviction action, consenting to its dismissal with prejudice with the award of attorney’s fees to Mr. Lee. Thereafter, Mr. Lee brought his FDCPA violation action, specifically that the law firm violated §1692e(2)(A) by making false representations of the character, amount and legal status of the debt.

All who deal or are concerned with the FDCPA know that it is a strict liability statute.  If you violate it, you violate it. The defendant (the law firm and the named partner), raised the bona fide error defense which requires proof of (1) the FDCPA violation was not intentional; (2) the FDCPA violation resulted from a bona fide error; and (3) the defendant has maintained reasonable procedures adapted to avoid such errors. The firm admitted it did not have any written guidelines or procedures in place regarding collection of debts.  This court concluded that there was a violation because the firm did not have procedures to identify or resolve possible errors regarding information supplied by its client where the information was suspect on its face.

Debtor collectors should get their procedures in place. Confirm the accuracy of the information received from your clients, particularly with your new clients and most particularly where the documents received from your client raise questions about accuracy of the amount owed.  You need more than the business records exception to the hearsay rule.  Ask questions- it will only benefit you in the end.