In the suit, Del
Campo v. ACCS, plaintiffs claim that ACCS's threats of
prosecution violated their rights under state and federal
consumer protection laws.
The company, American Corrective Counseling Services Inc. (ACCS),
is a so-called "check diversion" company, meaning that it uses
its contract with local prosecutors to send out letters on
official stationary threatening consumers who have written bad
checks with criminal prosecution or jail unless they pay
collection fees. The company then gives the prosecutors a share
of its revenues.
In the suit, Del Campo v. ACCS, plaintiffs claim that ACCS's
threats of prosecution violated their rights under state and
federal consumer protection laws. A lower court had ruled in
2006 that the company did not have sovereign immunity – a
protection given to branches of state government. ACCS appealed
and the case was argued in front of the U.S. Court of Appeals
for the Ninth Circuit in San Francisco in September.
In rejecting the company's claim of sovereign immunity, the
Ninth Circuit characterized sovereign immunity as "strong
medicine" that should be carefully limited, especially in the
case of private corporations that are not accountable to the
public. The court called the argument that a private company
could enjoy state sovereign immunity a "category error," like
"inquiring into the gender of a rock or into which day of the
week is reptilian."
ACCS has insisted throughout the litigation that it is not a
debt collector and is therefore not covered by federal law
protecting consumers from abusive collection practices. But in
its ruling, the court described ACCS's practices as "debt
collection rather than law enforcement."
The case will now go back to the district level so the court can
decide the merits of the suit.