Debt Collectors Not Entitled To State Immunity When Violating the FDCPA


A growing trend is for abusive debt collectors to start collecting on bad checks – which is fine as long as the law is followed – but the twist is these companies do this as if they were the district attorney.

The Consumer Law & Policy Blog summarizes the decision as follows in its excellent blog post:

Judge Berzon’s opinion is the most thorough and scholarly treatment to date on the question of private entities and sovereign immunity. In a sweeping rejection of ACCS’s arguments, the Ninth Circuit characterized sovereign immunity as “strong medicine” that should be carefully limited, especially in the case of for-profit corporations that are not democratically accountable to the public. Quoting the philosopher Gilbert Ryle, the court called the argument that a private company could enjoy sovereign immunity a “category error” like “inquiring into the gender of a rock or into which day of the week is reptilian.”

To summarize the problem, Deepak Gupta states it well:

I’ve blogged here before about so-called check diversion companies — private debt collectors that use their contracts with prosecutors to gin out collection demands, on official prosecutor stationary, threatening consumers who have written bad checks with criminal prosecution or jail unless they pay exorbitant collection fees. Passing a bad check is only a crime where there’s knowing and intentional fraud, but these companies demand fees regardless of whether a crime has been committed. It’s a lucrative and shady business that essentially criminalizes civil debt collection.

If you have been harassed by one of these masquerading collection agencies, which the Eleventh Circuit Court of Appeals (covering Alabama) has already said do not automatically have immunity, you do have rights. Please contact us and we will be happy to explain your options as we are always interested in suing abusive debt collectors.Another resource for you is to join our Facebook Fan Page – Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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