Monthly Archives: April 2015

Fed Agency Slaps Debt Collector Hired by Prosecutors

comic book noise cartoon symbolThe federal Consumer Financial Protection Bureau (CFPB) recently settled a lawsuit it filed against National Corrective Group (NCG), a debt collection agency that was working under contract for various district attorneys’ offices in California, Maryland, Colorado, Nevada, Illinois, Indiana, Iowa, and Pennsylvania.  The settlement put a stop to the abusive practices NCG was using against people in bad check writing diversion programs.

What??? Why Are District Attorney Offices Hiring Debt Collectors?

In many states, if you are charged with writing a bad check (bouncing a check) the prosecutor can refer you to a diversion program instead of pursuing prosecution.  If you comply with the terms of the program within a certain time period, you won’t be prosecuted. Most diversion programs require the defendant to repay the creditor, pay limited fees, and participate in an education class.

For example, under California law, the diversion program requires that the defendant:

  • repay the creditor
  • pay certain fees (which are limited in amount by law),
  • and participate in a check writing financial management class. Cal. Penal Code §§ 1001.60 to 1001.67.

The law allows prosecutorial offices to contract with private companies to run these diversion programs.

Enter NCG, a company that some state district attorney offices contracted with to run their diversion programs.

Lies, Threats, and Exorbitant Fees

You would think that law enforcement offices would want to do business with companies that follow the law. Unfortunately, that doesn’t seem to be the case.

According to the lawsuit that the CFPB filed, NCG:

  • pretended it was a law enforcement agency
  • threatened people with arrest and possible imprisonment if they didn’t participate in the diversion program, and
  • charged hundreds of dollars of excess fees.

Allegedly, NCG kicked back a small portion of the fees it collected to the district attorneys’ offices.

Letters Sent Using District Attorney Letterhead and Seal

The CFPB also alleged that the various district attorney offices allowed NCG to use their letterhead and sometimes their seal. The CFPB’s suit, however, did say that NCG sent out the letters without getting approval from the district attorney offices.

That’s both good and bad news: It’s good to know that the district attorneys didn’t authorize the threatening and deceptive letters. But why didn’t the offices have a better handle on what their contractors were doing?

The CFPB Slap

In the CFPB settlement, NCG agreed to not use district attorney letterhead or signatures, pretend to be a law enforcement agency, or use deception or threats in their letters. The CFPB will be watching (there’s a compliance piece to the settlement order) – so this is good news for people wanting to take advantage of the bad check writing diversion programs. (You can read the settlement order here.)

NCG will also pay a penalty of $50,000.  Needless to say, that’s not much of a financial disincentive.

 Civil Class Action in the Works

But NCG is not completely off the hook. According to the San Francisco Chronicle, in December 2014, a civil lawsuit was filed in San Francisco against the California arm of the company – CorrectiveSolutions.  The lawsuit seeks to recover millions of dollars that CorrectiveSolutions allegedly mischarged for fees. The plaintiffs’ attorneys are seeking class action status.

SCOTUS: A Tracking Device Makes for a Search

security electronic taggingAt the tail end of March, the Supreme Court of the United States provided a little refresher on the relationship between modern technology and search-and-seizure law. In the case in question, the Court decided whether imposing a physical monitoring system on someone in order to collect data is a “search.”

The case, Grady v. North Carolina, involved a man (Grady) who had been convicted of sexual offenses in 1997 and 2006. After completing the sentence for the second offense, the issue was whether, under North Carolina law, Grady should have to undergo satellite-based monitoring (SBM) as a repeat sex offender. (The SBM program meant the attachment of a tracking bracelet to an offender’s ankle.)

Grady didn’t contend that he didn’t qualify as a repeat offender under the relevant law. Instead, he argued that the monitoring program violated the Fourth Amendment protection against unreasonable searches and seizures.

Recent History

The Grady case piggybacks on couple recent Supreme Court decisions. In United States v. Jones, a 2012 case, the high court held that police installing a global positioning system (GPS) device on a suspect’s car and monitoring it constitutes a Fourth Amendment search. (See Can the police attach a GPS device to my car to track my whereabouts?) Then, in 2013’s Florida v. Jardines, the Court held that the police’s use of a trained dog to sniff around a suspect’s front porch was similarly a search.

In the Grady decision, the Court explained that Jones and Jardines lead to only one conclusion: The government’s attaching “a device to a person’s body, without consent, for the purpose of tracking that individual’s movements” is also a search. It didn’t matter to the Court that the North Carolina monitoring program was the product of the civil court system rather than a criminal punishment. That the SBM program gathers information “by physically intruding on a subject’s body” was enough for the Court.

Reasonable?

Ultimately, the Court’s opinion isn’t too controversial. It simply reaffirms that a nonconsensual physical intrusion for purposes of gathering information is a search. In matters of the Fourth Amendment, that’s only the first part of the analysis.

The Amendment protects us from “unreasonable searches and seizures” by the government. So, Question 1 is whether there’s been a search. Question 2 is whether, assuming a search, that search is reasonable. A search’s reasonableness hinges on all the circumstances; relevant ones include the purpose of the search and how much it invades reasonable privacy expectations.

In Grady, the Court didn’t get to Question 2.

One Person’s Junk Is Another’s Castle, in Ogden Utah

city illusAw, c’mon, are the city authorities really tearing down a kids’ cardboard fort in Ogden, Utah? It would appear so. According to news reports, Ogden City Code Enforcement ordered Jeremy and Dee Trentelman, parents, to remove the huge play castle that they’d put together for their two toddlers in their front yard.

It’s an impressive structure, built mostly of boxes, and containing a slide, trap door, tunnel, windows, and of course endless room for imagination. But the city is calling it “waste materials or junk,” and will penalize the Trentelmans $125 if they don’t get rid of it within 15 days.

Are cardboard castles really illegal in Ogden, Utah? To answer this, we have to go to the city codes. In Section 12-4-2 of the Property Maintenance Regulations, it says, “It is unlawful for any owner, occupant, agent or lessee of real property within the city, to allow, cause or permit the following material or objects to be in or upon any yard, garden, lawn, or outdoor premises of such property: 1. Junk or salvage material.”

That raises the obvious question, “What’s junk or salvage material?” As any lawyer can tell you, many laws and regulations contain a definitions section, and this one is no exception. Section 15-2-11 of the Definitions has this:

JUNK OR SALVAGE MATERIAL: Articles that are used, secondhand, worn out, obsolete, defective, destroyed or discarded and which may be reused or resold in their original form, or which may have outlived their usefulness in their original form and are commonly gathered up and sold to be converted into another product either of the same or a different kind by some manufacturing or recycling process, or which may be salvaged by separating, collecting, or retrieving reusable materials or parts therefrom. Junk or salvage material includes, but is not limited to, inoperable vehicles, auto parts or parts from other types of vehicles, tires, machinery or parts thereof, building materials, scrap metal or other scrap material, and recyclable materials when not located in a recycling processing center, but does not include refuse or hazardous materials. No article shall be considered “used” or “secondhand” for purposes of this definition, if the article is being used in its original form in conjunction with a main use established in conformance with this title, other than those uses involving salvaging or recycling. 

Okay, so arguably cardboard boxes, being used and recyclable, might be considered junk. But the more you look at this definition, the slipperier it gets. Would an artwork out of repurposed metal be junk? How about a faded plastic castle that was bought at a garage sale, and is therefore “used?”

The city can basically do what it wants with this definition, and it no doubt overlooks many objects that would meet it. So why did it go after the Trentelmans?

I would have guessed that a neighbor complained. The neighbors who were interviewed for the news coverage seemed supportive, but it just takes one to pick up the phone. Meanwhile, others in the community are actually building castles in solidarity! I’m looking forward to the photos.

KOSKINEN LAMENTS STATE OF THE IRS

Some highlights from Commissioner Koskinen’s recent speech to the National Press Club:

-IRS “absolutely deserved” the criticism is has been receiving for things like overspending at conferences and inappropriate scrutiny of some applications for tax exempt status.

-IRS suffers from “brain drain,” in that more than half of its workforce is over 50, and by next year more than 25% will be eligible to retire, and there just isn’t enough money available for hiring and training of enough younger replacements.

-Taxpayer “service” is suffering due to budget cuts, resulting in the level of telephone assistance to taxpayers registering below 40% – more than six out of every 10 folks who call simply cannot reach a human being to help resolve their problem.

California DNA Collection: Back in Effect

In December of last year, a California appeals court seemingly broke from U.S. Supreme Court precedent. (See California Court: Police Can’t Take DNA From Arrestees.) To oversimplify: SCOTUS upheld a Maryland law calling for authorities to collect DNA from people arrested for “serious” offenses, after which the California court struck down a similar law. (Maryland v. King, 133 S. Ct. 1958 (2013); People v. Buza, 231 Cal. App. 4th 1446 (2014).)

The California decision was notable: It showed how state courts can rely on interpretations of their own constitutions—rather than SCOTUS interpretations of the federal Constitution—to afford people greater liberty.

But the California DNA Act is already back in effect. In February, the California Supreme Court decided it would weigh in on the appeals court’s ruling. By “granting review,” the state high court wiped out the lower court’s decision. The California Supremes might end up agreeing with the lower court—and they very well might not. Regardless though, California officers are back to taking cheek swabs from people arrested for—and not necessarily charged with—felonies. Those DNA samples then make their way into a state database. (See “Should your DNA be collected…”)

So, the collection of DNA from felony arrestees in California was okay until it wasn’t, until it was again. We’ll finally know the state of the law when Chief Justice Tani Cantil-Sakauye and her colleagues lay it down.