Additional Defenses against Civil Actions

A financial institution may avoid liability in a civil action if the prima facie evidence shows that the violation was not intentional and resulted from a bona fide error that occurred despite the maintenance of procedures to avoid the error.[i]

An example of a bona fide error include clerical, calculation, computer malfunction, programming, or printing errors but does not include an error of legal judgment.

A violation that occurred unintentionally could be difficult to prove if the bank is unable to produce explicit evidence that it has an internal controls program designed to ensure compliance. A bank can strengthen its defense if it has demonstrated a commitment to compliance and it has adopted policies and procedures to detect errors before disclosures are furnished to consumers.

 


 

[i] http://www.federalreserve.gov/boarddocs/caletters/2009/0904/09-04_attachment.pdf


Inside Additional Defenses against Civil Actions