ACCS Defends ’Sovereign Immunity’ Case as Public Citizen Mulls Class Action Suit

A collection firm serving states' attorneys general that has lost two recent cases related to FDCPA violations is vowing to continue its work. Meanwhile, the public advocacy group that won the two cases now says it could go forward with class action initiatives against the collector.

Last week, the 9th U.S. Court of Appeals in San Francisco ruled that a collection firm hired by a district attorney to collect on bad checks is not protected against lawsuits claiming FDCPA violations ("ACCS Loses Sovereign Immunity Case in California," Feb. 8). The appeals court ruled that San Clemente, Calif.-based American Corrective Counseling Services is not “entitled to state sovereign immunity,” when working for district attorneys.

That decision is similar to the November 2007 ruling by Atlanta’s U.S. Court of Appeals for the Eleventh Circuit that ACCS was not shielded from civil cases because of its relationship with a public entity.

ACCS Senior Vice President Kirk Barrus told insideARM that the firm was within its rights to claim immunity under terms of the Financial Services Regulatory Act of 2006, which exempts private collectors running government check diversion programs from prosecution under the Fair Debt Collection Act.

"If we’re guilty, the DA’s office wouldn’t have been there arguing on our behalf,” Barrus adds, referring to a "friend of the court" brief filed on behalf of ACCS by an attorney with the California District Attorneys Association.

Barrus said the firm was considering its options in response to the recent court ruling.

In the San Francisco case, Washington, D.C.-based advocate Public Citizen charged that collection letters sent by ACCS were overly aggressive in tone and misrepresented that they came from the DA’s office. Barrus disagreed and said that ACCS “had some secretarial responsibilities under the contract,” so it sent letters to debtors using the district attorney’s letterhead.

Public Citizen Attorney Deepak Gupta said that the letters did not come from the DA’s office, and while a DA may approve a form letter, that’s not the same as approving a letter in its final form before it goes in the mail.

“Our concern in each of the cases is that ACCS was implying criminal intent (of the debtor). It’s not a crime to bounce a check,” Gupta says. “They’re preying on low income people. They justify themselves by saying they offer a program; but the program is nothing more than teaching people how to balance a checkbook.”

Gupta said Public Citizen was considering pursuing a class action suit against ACCS.