Collector - November 2020 - 40

GOVERNMENTAFFAIRS

the employee who received the letter acted in
accordance with that process.
For the well-prepared agency, a mistake
need not result in FDCPA liability. As courts
like the 11th Circuit have reiterated time and
again, "documenting a regular and orderly
process for enforcing [a stated compliance
policy]" and demonstrating "how that policy
is communicated [and] implemented" will
often be the pillars that support a bona fide
error defense.

VICARIOUS LIABILITY
"The buck stops here" holds true for
creditors, including passive debt buyers,
as well as for collection agencies that
use other agencies to collect debt, too.
Numerous courts have held that entities
that themselves meet the definition of "debt
collector" under the FDCPA may be liable
for violations under traditional principles
of agency law. Such liability falls under the
rubric of "vicarious liability."
As the 9th Circuit wrote not long ago in
its noteworthy opinion remanding McAdory
v. DNF Associates (9th Cir. 2020, Case No.
18-35923), "[t]he circumstances under
which an entity can be a 'debt collector'
logically precedes consideration of whether
and when a debt collector can be held
vicariously liable for the actions of another
debt collector" under traditional principles
of agency law.

"At the end of the day, your business will
be held accountable for mistakes that can
generally be avoided by the adoption of
policies and procedures designed to avoid
harm to the consumer."
But for the purposes of this analysis, the
definition of "debt collector" has expanded
in recent years, e.g., with the 3rd Circuit's
opinion in Barbato v. Greystone Alliance,
which held that where a business's "raison
d'ĂȘtre" is obtaining payment on debts
(whether those debts be assigned for
collection activity or purchased from the
creditor), the business qualifies as a debt
collector for the purposes of the FDCPA.
This "principal purpose" test, now also
adopted by the 9th Circuit in McAdory,
broadens the potential scope of vicarious
liability claims to those principals, like passive
debt buyers, who may not themselves be
directly engaged in debt collection activities,
e.g., sending letters, making calls or filing suits.
Note, too, that claims under state law
counterparts to the FDCPA may broaden the
scope of vicarious liability even further. For
example, in Agrelo v. Affinity Management
Services, LLC, the 11th Circuit held that a

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lower court decision applying vicarious
liability decisions under the FDCPA were
inapposite for a claim brought under the
Florida Consumer Collection Practices Act.
So, what's a principal to do? As with
bona fide error, creditors and agencies
should consider establishing policies
and procedures designed to monitor the
activities of vendors and other partners.
And don't put those policies and procedures
in a drawer and forget about them. Conduct
audits. Do random checks. Insist on seeing
the vendor's policies and compliance
protocols. But beware the temptation to
over-manage your vendors' or partners'
activities. While control over an agent's
conduct has not been found to be a
requirement for a vicarious liability finding
in the FDCPA context, the more control
that a principal asserts over the actions of
its agent, the more likely that principal will
be held accountable for those actions under
traditional liability principles.
Whatever you do, remember: the buck
stops with you. Cases involving bona fide
error or vicarious liability rise and fall on
the decisions that agencies make in adopting
policies and procedures designed to avoid
clerical, human and computer errors and
on how steadfastly agencies adhere to those
protocols and document that adherence.
When an agency puts robust policies in place
and can demonstrate that it has adhered
to them, the agency stands a much better
chance of prevailing in cases that implicate
bona fide error or vicarious liability.
Colin Winkler is corporate counsel and
Betsy Clarke is a compliance analyst for
ACA International.

40

ACAINTERNATIONAL.ORG


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Collector - November 2020

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