The Supreme Court recently heard oral arguments in a case involving an
Ohio law that allows the state attorney general to use “special
counsel” (independent contractors) to collect tax debts. This law
has been in effect as far back as the Great Depression. Federal law, however,
prohibits abusive and deceptive representation to collect debts as a way
to protect consumers from predatory practices. Using any name other than
the true name of the debt collector to pursue payment of a debt is unlawful,
but with the exception of state employees and officers who act as debt
collectors within the course of their duties.
Some are now arguing that this law should cover the broadest definition
of the term “officer” in order to best protect “government
operations.” They argue that with billions of dollars worth of unpaid
tax debt and only a handful of assistant attorneys general to collect
debts across the entire state of Ohio, making this change would result
in a huge fiscal impact.
Ohio has intervened as a defendant in the case, which was filed by two
plaintiffs who were sent collection notices from private firms on behalf
of the state. Although the notices contained letterhead reading “Office
of the Attorney General,” they were actually sent by third party
“special counsel” with a personal financial stake in the matter.
While some of the Supreme Court Justices did not agree that this constituted
a deceptive practice, the plaintiffs’ attorneys pointed out that
the law’s language specifically prohibits using any other name to
collect a debt, and that to use a different name makes it unclear who
is and is not the creditor. The opposition responded, however, that the
purpose of the letterhead is to allow the debtor to know exactly who they
are dealing with and that the collection attempt is not a scam. They further
argued that the Attorney General would actually be more vigilant in policing
those who collect on their behalf, which is actually a benefit.
This case is the first in the last 10 years that will require the eight-member
court to interpret liability standards under federal debt collection law.
For more information on the
Fair Debt Collection Practices Act, please
contact a Chicago consumer lawyer at Sulaiman Law Group, LTD.