Indiana Supreme Court Denies Petition In Key FDCPA Strict Liability Case

Indiana’s Supreme Court has quietly delivered a significant win for collection law firms and their creditors by denying transfer in a closely watched case on FDCPA strict liability, effectively leaving in place an Indiana Court of Appeals ruling that allows debt collection counsel to rely in good faith on their clients’ factual assertions when litigating consumer debts.

Procedural posture

The decision came in a petition asking the Indiana Supreme Court to review an appellate ruling involving FDCPA claims against a debt collection law firm. By denying the petition, the high court let the lower court’s opinion stand without modification or additional guidance.

• The underlying case centered on whether the Fair Debt Collection Practices Act operates as a pure strict liability statute for litigation-related misstatements, or whether a law firm may avoid liability when it reasonably relies on information supplied by its creditor client.

• The Court’s denial of transfer means the appellate decision remains binding Indiana authority on these issues but does not create new written precedent from the Supreme Court itself.

Core FDCPA issue: strict liability vs. good‑faith reliance

FDCPA plaintiffs frequently characterize the statute as imposing strict liability for false statements in collection communications and pleadings, with the primary safety valve being the narrow “bona fide error” defense in 15 U.S.C. 1692k(c). Industry groups have warned that reading the Act as pure strict liability—especially in the litigation context—would force collection law firms to independently re‑underwrite and re‑document every account rather than reasonably rely on clients’ data.

The Indiana Court of Appeals opinion, left intact by the Supreme Court’s denial of transfer, cuts against that strictest reading:

• The appellate court recognized that a collection firm must be able to rely in good faith on the factual representations of its creditor client, so long as there is no reason to doubt their accuracy.

• That approach tempers FDCPA strict liability by acknowledging the practical reality that law firms are not original creditors and generally do not control the underlying account-level recordkeeping.

Practically, the decision draws a line between:

• Liability for a firm’s own reckless or knowing use of inaccurate information, and

• Non‑liability where a firm reasonably relies on client‑supplied facts that later turn out to be wrong.

Relationship to the bona fide error defense

Although the FDCPA’s bona fide error defense technically provides a statutory escape hatch for “unintentional” violations that occur despite “procedures reasonably adapted” to avoid error, courts have sharply limited that defense—especially for mistakes of law. The Indiana appellate ruling, however, frames the controversy at the level of what qualifies as the collector’s own conduct and knowledge:

• By emphasizing reasonable reliance on client factual assertions, the opinion effectively narrows the universe of circumstances in which a law firm is deemed to have “made” a false representation under the FDCPA in the first place.

• That framing may allow defendants to prevail without having to satisfy the demanding elements of the bona fide error defense, particularly where the alleged violation turns on account‑level data the law firm did not originate.

For defense counsel, this gives an additional doctrinal hook beyond bona fide error: the argument that a law firm cannot be strictly liable for an inaccuracy it had no reason to detect and was entitled to treat as reliable.

Implications for collection law firms and creditors

For Indiana‑filed collection litigation and potentially persuasive authority elsewhere, the Supreme Court’s denial of transfer has several concrete compliance and risk implications:

• Reinforces role of client data: Collection firms can continue to structure their practices around receiving and using creditor‑supplied data, rather than rebuilding every account from scratch, so long as they have reasonable intake and verification processes.

• Encourages documented reliance protocols: The ruling underscores the value of written policies documenting how firms intake, screen, and use client information—both to demonstrate good‑faith reliance and to distinguish factual mistakes from legal ones.

• Narrows some plaintiff theories: FDCPA plaintiffs in Indiana will face a steeper climb when they seek to impose strict liability based solely on later‑discovered inaccuracies in pleadings or affidavits that trace back to client files rather than the firm’s own conduct.

• Differentiates Indiana from more rigid readings: While federal courts still describe the FDCPA as “strict liability” in many contexts, this state‑level development adds to the body of case law recognizing that strict liability has practical limits where third‑party professionals rely on client‑provided facts.

Takeaways for industry and next steps

For the credit and collection industry, the Indiana Supreme Court’s action is more evolutionary than revolutionary, but it arrives at a time when plaintiffs’ lawyers are increasingly targeting technical inaccuracies in court filings as standalone FDCPA claims. Leaving the appellate ruling undisturbed:

• Signals judicial receptivity—at least in Indiana—to reasonableness and reliance arguments in FDCPA litigation against law firms.

• Provides a useful citation for defense counsel nationally arguing that strict liability should not extend to every downstream error in client data.

Collection firms operating in Indiana should:

• Review their engagement letters and data‑transfer protocols to ensure they clearly define the scope of the firm’s reliance on client information;

• Update compliance training to emphasize when and how staff should question creditor‑supplied data; and

• Coordinate with creditors to strengthen upstream data quality and documentation, minimizing the risk that “good‑faith reliance” will be tested in the first place.

As other state and federal courts continue to grapple with the contours of FDCPA strict liability, Indiana’s experience—now effectively ratified by its Supreme Court’s refusal to disturb the appellate ruling—will likely feature in future debates over how far the statute reaches into the relationship between creditors and their litigation counsel.