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Lawyers Collecting State Debts Not 'Officers'; Subject to FDCPA

By Mark Wilson, Esq. on May 12, 2015 | Last updated on March 21, 2019

Allowing debt collectors to use state prosecutors' letterhead is a controversial practice. It nets counties money (debt collectors essentially rent out the letterhead), but the ABA and other legal organizations say it's deceptive because a county prosecutor isn't actually charging the debtor with a crime.

To that end, the Sixth Circuit addressed two kinks in the issue: Whether the Fair Debt Collection Practices Act (FDCPA) applies to law firms tasked with collecting state debts, and whether their use of the Ohio Attorney General's letterhead violated the FDCPA.

Independent Contractor at Law

FDCPA prevents (among other things) debt collectors from falsely claiming they're government officials when seeking to collect a debt. Ohio law authorizes the attorney general to "deputize" lawyers to collect debts owed to the state on the attorney general's behalf. This stands in contrast to your typical prosecutor-letterhead scenario, where the debt is owed to a private party.

The big issue on appeal here is whether a private lawyer appointed by the attorney general is an "officer or employee" of the state who is "authorized by law." If so, that lawyer, in his capacity of collecting debts for the state, is exempt from the FDCPA.

The problem is that "officer" and "employee" have specific meanings in federal law. An officer of a state must have duties that he or she has to fulfill. A lawyer deputized as a "special counsel" by the state attorney general has no duties and therefore cannot be an officer; the title of special counsel grants an authorization to act, essentially making a lawyer an independent contractor.

This evaluation was supported by some inconsistencies in the arguments. For one, the Sixth Circuit said, the attorney general "has legally distanced himself and the OAG from special counsel so that the State of Ohio does not suffer the negative consequences of special counsel's actions" -- but at the same time asks the court to conclude that debt collecting lawyers "are officers of the State of Ohio, directly under his supervision." The court was unwilling to let the AG have his cake and eat it, too.

The Least Sophisticated Consumer

Finding that these lawyers were independent contractors, and not state officers, the court moved on -- and how! It quickly came to the conclusion that there was no need to employ the attorney general's letterhead in these debt collection notices. That, however, isn't dispositive. The letterhead also has to be confusing to the "least sophisticated consumer."

The court found, unsurprisingly, that a debt collection notice with the state seal and Mike DeWine's name on top would convince (and has convinced) a consumer that "Ohio's chief law enforcement officer is attempting to collect from them." The inclusion of the name of the special counsel might clarify what's going on in the letter, but that's not a certainty, and as a result, the Sixth Circuit sent this back for a jury to decide whether the letter would be misleading.

As a matter of law, FDCPA applies. The letters were technically deceptive because the special counsel and the state are not one and the same, but whether a consumer was actually confused, and whether special counsel will be liable, remains to be seen.

Judge Jeffrey Sutton (who brought you DeBoer v. Snyder) dissented, saying that the deputized special counsel were "officers" and that there was nothing deceptive about the letterhead or any of the information contained therein. He agreed with Ohio's "federalism" argument; namely, that Congress can't tell the states how they structure their executive branch employees.

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