Reichert v. National Credit Systems, Inc.

The issue in this successful Ninth Circuit appeal was whether debt collectors can escape liability under the Fair Debt Collection Practices Act by claiming that their conduct was the result of reliance on their creditor-clients. Arizona resident Robert Reichert was contacted by a debt collector about an outstanding bill from his old apartment complex. The debt collector, National Credit Systems Inc., had tacked on charges for “attorney’s fees,” but couldn’t explain where the charges came from. NCS claimed that it had overlooked the error because the landlord-creditor had always provided accurate information in the past.

Public Citizen argued the appeal to the Ninth Circuit on January 16, 2008. In a unanimous opinion issued on July 7, 2008, the Ninth Circuit agreed with our position, holding that debt collectors must make a showing of detailed preventive procedures designed to prevent the specific error in question to escape liability for their actions. “A debt collector is not entitled under the FDCPA to sit back and wait until a creditor makes a mistake and then institute procedures to prevent a recurrence,” the court ruled.