Business Law

Urbina v. Nat’l. Bus. Factors Inc. 979 F.3d 758 (9th Cir. 2020)

Please share:

The following is a case update written by Leonard Gumport analyzing a recent case of interest.


In Urbina v. Nat’l. Bus. Factors Inc. 979 F.3d 758 (9th Cir. 2020) (“Urbina”), the United States Court of Appeals for the Ninth Circuit held that a debt collector did not qualify for the bona fide error defense in 15 U.S.C. § 1692k(c) of the Fair Debt Collection Practices Act (“FDCPA”) by contractually obligating its creditor-clients to provide accurate information.

To read the full published decision, click here.


In 2014, National Business Factors (“NBF”) entered into a debt collection services agreement with Tahoe Fracture Clinic (“TFC”). In the agreement, TFC agreed that it would assign outstanding debts to NBF for collection “with only accurate data” and that the debt balances would reflect “legitimate, enforceable obligations of the consumer.” The agreement provided that NBF could charge interest on the assigned debts at the legal rate.

During 2015 and 2016, TFC provided medical services to Mercedes Urbina (“Urbina”). Urbina’s written agreement with TFC did not specifically state whether she would be obligated to pay interest on TFC’s billings. In July 2016, shortly after her last treatment, a portion of her medical bill from TFC was paid by insurance. Urbina also made several monthly payments, the last of which she made in August 2016. In September 2016, TFC notified Urbina that she owed an unpaid principal balance of $614.52.

On January 4, 2017, Urbina’s medical debt was assigned by TFC to NBF to collect from Urbina. On January 5, 2017, NBF sent to Urbina a collection letter, which sought to collect $614.52 in principal and $29.07 in interest. The amount of interest demanded by NBF was calculated from February 26, 2016, even though Urbina made her last payment in August 2016. NBF later conceded that it should have computed interest from August 2016 instead of February 2016.  

On June 20, 2017, Urbina filed a complaint against NBF in the U.S. District Court for the District of Nevada. In her complaint and in a first amended complaint, Urbina alleged that NBF violated the FDCPA by charging interest that was not owed and moved for summary judgment. In opposing Urbina’s motion, NBF argued that it was entitled to charge interest on Urbina’s debt to TFC. NBF acknowledged that the $29.07 in interest sought from Urbina was erroneously computed from February 2016, rather than August 2016, but argued that it was entitled to the bona fide error defense under 15 U.S.C. § 1692k(c).     

On April 22, 2019, the district court granted summary judgment for NBF. The district court ruled that Nevada law permitted NBF to charge interest on Urbina’s medical bill, but that the permissible start date for charging interest was August 2016 instead of the February 2016 date utilized by NBF. By attempting to collect interest that was not owed, NBF violated the FDCPA. The district court, however, entered summary judgment in favor of NBF under 15 U.S.C. § 1692k(c) on the ground that NBF’s violation of the FDCPA was unintentional and resulted from a bona fide error. 

On appeal to the Ninth Circuit, Urbina argued that NBF conduct did not qualify for the bona fide error defense under the FDCPA. NBF countered, among other things, that it reasonably relied on TFC’s contractual commitment to provide accurate information to NBF.

On August 17, 2020, in a brief unpublished decision, the Ninth Circuit reversed the district court’s order granting summary judgment to NBF and remanded in Urbina v. Nat’l Bus. Factors Inc., 816 Fed. Appx. 232 (9th Cir. 2020). On November 5, 2020, the Ninth Circuit published a revised and more detailed decision in Urbina v. Nat’l Bus. Factors Inc., 979 F.3d 758 (9th Cir. 2020).


In Urbina, the Ninth Circuit began its analysis of the bona error defense in 15 U.S.C. § 1692k(c) by summarizing the history, purpose, and statutory framework of the FDCPA. Congress enacted the FDCPA to eliminate abusive debt collection practices, to ensure that debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent action by States to protect consumers from abusive debt collection practices. Urbina, 979 F.3d at 762. The FDCPA prohibits debt collectors from collecting any amount not expressly authorized by the agreement creating the debt or permitted by law. The FDCPA imposes strict liability on debt collectors, and a debt collector who violates the FDCPA is liable for actual damages, attorney’s fees and costs, as well as and additional damages not to exceed $1,000 per violation. Id. at 762-763. The FDCPA should be liberally construed in favor of consumers. Id. at 763.

To avoid liability under the FDCPA, debt collectors may raise the limited affirmative defense (and have the burden of proving) that their conduct was “not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” Urbina, at 763 (quoting 15 U.S.C. § 1692k(c)). To qualify for the bona fide error defense, a debt collector must satisfy three requirements by showing that: (1) the debt collector did not intentionally violate the FDCPA; (2) the violation of the FDCPA resulted from a bona fide error; and (3) the debt collector maintained procedures reasonably adapted to avoid the violation. Urbina, at 763.

In Urbina, the parties did not dispute that NBF’s conduct met the first two requirements. The Ninth Circuit concluded, however, that the district court erred when it ruled that NBF met the third requirement merely by contractually obligating TFC to provide NBF with accurate information. To satisfy the third requirement, a debt collector has an affirmative obligation to maintain procedures designed to avoid discoverable errors, including, but not limited to, errors in calculation and itemization. The bona fide error defense “does not shield debt collectors who unreasonably rely on creditors’ representations.” 763. “[U]nquestioned reliance” by a debt collector on a creditor’s information does not suffice as a bona fide error defense. Ibid. “The procedures that have qualified for the bona fide error defense were consistently applied by collectors on a debt-by-debt basis,” and they do not include “one-time agreements committing creditor-clients to provide accurate information that are later acted upon without question.” Id. at 765.

Nor did NBF qualify for the bona fide error defense by sending follow-up letters requesting its creditor-clients, including TFC, to verify their information. NBF did not wait for a response from TFC before attempting to collect from Urbina. NBF did not show that its practice of requesting account verification from TFC was “genuinely calculated to catch errors of the sort that occurred here.” Id. at 765.

Author’s Comments

This FDCPA litigation arose from NBF’s attempt to collect $29.07 in interest on a $614.52 medical bill. In the district court, NBF argued that the erroneously charged interest totaled $16.06 and was an immaterial violation of the FDCPA. The district court rejected that argument. The district court ruled that, under the FDCPA, the test of materiality is not the amount by which the debt has been overstated, but whether the debt collector’s misstatement would likely mislead a hypothetical “least sophisticated debtor” to suffer a disadvantage in responding to the collection effort. Under that standard, NBF’s misstatement of the amount of interest due was material. See Urbina v. Nat’l Bus. Factors Inc., 2019 U.S. Dist. LEXIS 6722, at *27 (D. Nev. 2019) (citing Afewerki v. Anaya Law Group, 868 F.3d 771, 776 (9th Cir. 2017)).

Not mentioned in Urbina are the events in Urbina’s bankruptcy case. NBF sent its demand letter to Urbina in January 2017. On February 15, 2017, Urbina filed a chapter 7 petition in the United States Bankruptcy Court for the District of Nevada in Case No. 17-bk-50155. In her bankruptcy schedules, Urbina claimed an exemption in her potential claim against NBF. On May 26, 2017, the bankruptcy court granted Urbina a discharge. On June 20, 2017, after discharging her indebtedness, Urbina filed her complaint under the FDCPA against NBF.

Readers of the attached decision in Urbina will note that it is entitled Mercedes v. Nat’l Bus. Factors Inc., instead of Urbina v. Nat’l Bus. Factors Inc. The erroneous title on the attached decision appears to result from a bona fide error that does not appear in the Court’s official version of the opinion.  

These materials were written by Leonard L. Gumport of Gumport Law Firm, PC in Pasadena ( Editorial contributions were provided by Maggie E. Schroeder of Higgs Fletcher & Mack, LLP, in San Diego (

Forgot Password

Enter the email associated with you account. You will then receive a link in your inbox to reset your password.

Personal Information

Select Section(s)

CLA Membership is $99 and includes one section. Additional sections are $99 each.