Supreme Court OKs Private Debt Collectors’ Use Of Prosecutors’ Letterhead To Make People Pay

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What’s more likely to get you to pay a questionable debt: A notice from some debt collection company you’ve never heard of, or a letter from your state’s attorney general about that same debt? Some states allow certain private, for-profit debt collectors to use prosecutors’ letterhead in correspondence with consumers about debts, even though the American Bar Association looks down on the practice. This morning, the U.S. Supreme Court chimed in on the debate, unanimously giving its SCOTUS seal of approval, at least when it’s done with the state’s approval.

The particular case, Sheriff v. Gillie, before the Supremes involved an Ohio state practice, whereby the Ohio Attorney General appoints private attorneys as “special counsel” to collect debts on the Attorney General’s behalf.

Being deemed a special counsel in Ohio doesn’t just allow a debt collector to use the state AG’s letterhead in dealing with a consumer; the collector is actually required to use the letterhead when trying to get that debt paid.

Two Ohio women sued a couple of these special counsel, alleging that the use of the letterhead violated the Fair Debt Collection Practices Act’s prohibition against false or misleading representations.

At the District Court level, the Ohio AG’s office successfully intervened on the debt collector defendants’ behalf, arguing that they were effectively officers of the state and therefore exempted from the FDCPA.

However, the Sixth Circuit Court of Appeals subsequently disagreed, vacating the lower court ruling. The appeals panel didn’t rule on whether or not the letterhead was misleading; only that the debt collectors are independent contractors (and not officers of the state).

The pendulum swung the other way once again this morning, with the Supreme Court agreeing that yes, these collectors are independent contractors, but no, the use of the letterhead doesn’t rise to a violation of the law.

In the opinion [PDF] for a unanimous SCOTUS, Justice Ruth Bader Ginsburg explains that it doesn’t really matter whether or not you consider the special counsel to be state officials, because “their use of the Attorney General’s letterhead accurately conveys that special counsel act on behalf of the Attorney General.”

The special counsel are collecting debts owed to the state, and doing so on the state’s behalf, so SCOTUS concluded that it only makes sense that the Ohio AG be identified in the letterhead.

Justice Ginsburg writes that the use of the AG’s letterhead is really the same as a bold-face statement declaring, “We write to you as special counsel to the [A]ttorney [G]eneral who has authorized us to collect a debt you owe to [the State or an instrumentality thereof].”

“If that representation is accurate… it would make scant sense to rank as unlawful use of a letterhead conveying the very same message,” explains the court, noting that the signature blocks of the letters sent identify the signers as “special” or “outside” counsel.

“Special counsel do not employ a false name when using the Attorney General’s letterhead at his instruction,” reads the opinion. “Far from misrepresenting special counsel’s identity, letters sent by special counsel accurately identify the office primarily responsible for collection of the debt (the Attorney General), special counsel’s affiliation with that office, and the address (special counsel’s law firm) to which payment should be sent.”

One concern with programs like this is the potential for abuse. In 2015, the Consumer Financial Protection Bureau accused one collector of using prosecutors’ letterhead to create the false impression that consumers may be prosecuted for writing bounced checks – before their cases were ever reviewed by the proper authorities.