Supreme Court Holds Debt Collectors to High Standard
In a decision that appears to favor consumers, the Supreme Court held that debt collectors cannot defend themselves by arguing they made a legal error when sending a collection notice. In the case before the Court, an Ohio law firm, on behalf of Countrywide, foreclosed on a house. The homeowner disputed the debt existed, but the law firm stated in their foreclosure suit the debt was assumed to be valid unless the home owner disputed it in writing.
The Court noted that mistake of law is usually not considered a defense, "We have long recognized the common maxim, familiar to all minds, that ignorance of the law will not excuse any person, either civilly or criminally . . . ." The Supreme Court went on to say that Congress did not expressly provide debt collectors with "mistake-of-law" as a defense to their actions. In dissent, two justices argued this will lead to a flood of litigation by plaintiffs’ lawyers.