## Facts

- A consumer owed a debt that a debt collector attempted to collect.
- The parties arranged for the consumer to pay the debt through two scheduled electronic withdrawals from the consumer’s checking account.
- The collector obtained authorization for the two debits but did not provide written advance notice for each withdrawal.
- The consumer sued in a putative class action, asserting violations of the Electronic Fund Transfer Act (EFTA) and the Fair Debt Collection Practices Act (FDCPA).
- After discovery, both sides moved for summary judgment.

## Issues

1. Whether two scheduled electronic withdrawals to settle a debt are “preauthorized electronic fund transfers” under the EFTA and Regulation E, triggering statutory notice/authorization requirements for such transfers.
2. Whether the collector’s conduct and communications concerning the electronic withdrawals violated the FDCPA’s prohibitions on misleading representations and unfair practices.
3. Whether any FDCPA violation was excused by the FDCPA’s bona fide error defense requiring unintentional violation plus procedures reasonably adapted to prevent the error.

## Decision

- The court granted summary judgment to the collector on the EFTA claim, holding the two scheduled debits were not “preauthorized electronic fund transfers.”
- The court granted in part and denied in part summary judgment on the FDCPA claims, dismissing some theories while allowing others to proceed due to disputed facts or evidence supporting liability.
- The court denied summary judgment on the bona fide error defense as to the surviving FDCPA claims because the defense was not established as a matter of law.

## Legal Principles

- Under the EFTA, a “preauthorized electronic fund transfer” is an electronic transfer authorized in advance to recur at substantially regular intervals; a limited, finite set of debits arranged to settle a debt may fall outside that definition.
- FDCPA liability for misleading practices is evaluated from the standpoint of the least sophisticated consumer and may turn on whether challenged statements or practices are materially misleading in context.
- The FDCPA’s bona fide error defense requires proof (by a preponderance) that the violation was unintentional and resulted from a bona fide error despite procedures reasonably adapted to avoid such errors; whether the defense applies is commonly fact-dependent and may not be resolved on summary judgment where intent and procedures are disputed.

## Conclusion

The court dismissed the EFTA claim because two scheduled settlement withdrawals did not qualify as recurring “preauthorized” transfers, narrowed the FDCPA case by granting summary judgment on some theories while leaving others for trial, and held the collector had not shown the bona fide error defense as a matter of law for the remaining FDCPA claims.


Puglisi v. Debt Recovery Sols., LLC, 822 F. Supp. 2d 218 (E.D.N.Y. 2011)