Skip to main content

Search

Collection Actions: 11.6.3.1 Application of the ECOA to Court Debt

Unlike Title VI,506 the Equal Credit Opportunity Act (ECOA) provides for a private right of action not only for disparate treatment on the basis of race, color, religion, national origin, sex, marital status, or age, but also for practices that have a disparate impact on those bases.507 Notably, the ECOA also provides a private right of action to challenge disparate treatment or impact on the basis that a consumer’s applicant’s income derives from a public assistance program.

Collection Actions: 11.6.3.2.1 Overview

Courts assessing lending discrimination claims have generally adopted the burden shifting and evidentiary framework used in employment discrimination cases.518 To make out a prima facie case of disparate impact, an ECOA plaintiff must: (1) identify a specific, facially neutral policy or practice adopted by the defendant; (2) allege a disparate impact on a protected group; and (3) show a causal relationship between the challenged policy or practice and the alleged disparate impact.519 If the

Collection Actions: 11.6.3.2.2 Identifying a defendant, policy, and causation

The first step in setting out an ECOA disparate impact claim is identifying the actor and the policy that cause the discriminatory harm. “It is not enough to simply allege that there is a disparate impact on [consumers], or point to a generalized policy that leads to such an impact. Rather, the [plaintiff] is responsible for isolating and identifying the specific . . . practices that are allegedly responsible for any observed statistical disparities.”521

Collection Actions: 11.6.3.2.3 Shifting the burden

Once the plaintiff sets out a prima facie case of disparate impact, the burden shifts to the defendant to establish “that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent or defendant.”526 The analogous test in the employment discrimination context requires that employers demonstrate both business necessity and job-relatedness.527 In the ECOA context, then, creditors should have to demonstrate both necessity an

Collection Actions: 11.6.3.3 Examples of ECOA Criminal Justice Debt Claims

The following illustrates the types of criminal justice debt practices that might give rise to ECOA claims. Consider when wage earners have an easier time accessing favorable payment plans and avoiding harsh collection tactics than do those whose earnings are derived primarily from public benefits, or when those who receive income solely from public benefits are not eligible for payment plans.

Collection Actions: 11.6.4.1 Application of FDCPA Substantive Requirements to Criminal Justice Debt

The Fair Debt Collection Practices Act (FDCPA) extensively regulates the collection of debts and provides private remedies for Act violations.538 As described in the next two subsections, application of the FDCPA to criminal justice debt must contend with whether the Act applies to parties involved in the collection of government debt and whether criminal justice debt falls within the scope of “debt” covered by the Act.

Collection Actions: 11.6.4.2 Actors Covered by the FDCPA

The FDCPA does not apply to original creditors or to “any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties.”546 The Act does, however, apply to private, third-party debt collectors, even when expressly authorized by law—or contracted by government officials—to serve as debt collectors.547

Collection Actions: 11.6.5 Fair Credit Reporting Act

One of the potential adverse consequences of criminal justice debt is that both the debt and its nonpayment might be reported to a consumer reporting agency (CRA), though the legal landscape has been changing. The Fair Credit Reporting Act (FCRA) regulates consumer rights in this area (as to the practices of CRAs) and those who furnish or use information from the CRAs.

Collection Actions: 11.6.6 State Law Claims

Criminal justice debt practices also may give rise to state law claims, including various tort claims.579 For instance, advocates may consider bringing an abuse of process claim.580 At least two courts have allowed an abuse of process claim against a private probation company to proceed.

Collection Actions: 11.6.7.1 Sovereign and Qualified Immunity

The Eleventh Amendment protects states from claims for monetary damages in federal court590 and prevents Congress from subjecting state governments to suit in state court without their consent.591

However, the Eleventh Amendment does not foreclose the following avenues for litigation:

Collection Actions: 11.6.7.2.1 Overview

When an act by a state or local official is covered by judicial immunity, the official is completely immune from suit for damages, no matter how egregious the misconduct. Judicial immunity also limits Civil Rights Act section 1983 claims against judges for injunctive relief arising out of actions taken in their judicial capacity.598

Collection Actions: 11.6.7.2.2 Specific immunity considerations for criminal justice debt litigation

To avoid running into judicial immunity problems in criminal justice debt litigation, advocates should identify court practices that are the result of policies or widespread custom and not simply the result of decisions by individual judges in individual cases. Suits based on these policies and practices are unlikely to chill judicial actors from exercising their discretion in particular cases.

Collection Actions: 11.6.7.3.1 Younger abstention

Younger abstention limits federal courts from intervening in ongoing state court proceedings.621 Younger abstention clearly applies to ongoing state criminal prosecutions.622 It also applies to certain civil enforcement proceedings that are akin to criminal prosecution in important respects and pending civil proceedings involving certain orders uniquely in furtherance of the state courts’ ability to perform their judicial functions.62

Collection Actions: 11.6.7.3.3 Rooker-Feldman

The Rooker-Feldman doctrine, which is a matter of jurisdiction, bars federal district courts from modifying or reversing state court judgments.633 A federal court lacks jurisdiction only when the losing party in a state court action seeks “what in substance would be appellate review of the state judgment”634 or when the plaintiff’s injury was caused by the state court’s ruling and the plaintiff seeks relief that would undo that judgment.635

Collection Actions: 11.7.3.1 The Wrong Person

An applicant’s tenant screening report may include criminal records belonging to a different person, referred to as a “mismatched report.” This type of error often results from background screeners’ use of unsophisticated or over-inclusive criteria to match applicants with their criminal record information, along with their failure to use other available information to verify that the criminal record in fact belongs to the rental applicant.

Collection Actions: 11.7.3.2 Incomplete or Misleading Status of Criminal Proceedings

Reporting on the accurate status of a criminal proceeding requires regularly checking the original source data at courthouses. Tenant screening companies typically do not search courthouse records each time they conduct a background check, and instead rely on databases of this information that may not be regularly updated. Thus, a tenant screening company may report an arrest or a criminal charge, but not a subsequent dismissal or acquittal, for example.644

Collection Actions: 11.7.3.3 Misclassified Offenses

Screening reports commonly miscategorize offenses, such as categorizing a misdemeanor as a felony, or a traffic ticket as a misdemeanor. This occurs because, after retrieving criminal record information, the tenant screening company must then sort the records into categories. At this point, screeners sometimes inaccurately categorize the records, often due to a misunderstanding of how a particular state reports and classifies criminal record information.645

Collection Actions: 11.7.3.4 Duplicate Criminal Records

A tenant screening report may list a single arrest or incident multiple times, wrongly suggesting that the applicant has committed multiple offenses. For example, when a tenant screening company relies on multiple databases of criminal record information, the company may treat the same offense listed in each database as a separate offense. Similarly, the tenant screening company may report various stages of the same offense as separate offenses.646

Collection Actions: 11.7.3.5 Expunged Records

Nearly all states provide remedies to limit the dissemination of criminal record information. They do so under a host of names, including “expungement,” “sealing,” “clearing,” “set-aside,” and “pardon.” In this section, the term “expungement” is meant to encompass all such remedies. Unfortunately, tenant screening companies commonly report expunged records. The reporting of expunged records often occurs due to tenant screeners’ and records vendors’ failure to regularly update their databases to remove these records.647

Collection Actions: 11.7.3.6 Obsolete Criminal Records

Background screeners can only report non-conviction records for seven years. Non-conviction records include arrests, criminal complaints, warrants, indictments, parole, probation, and other various possible dispositions besides convictions.648 The seven-year period for arrest records starts from the day of arrest. Arrest warrants that are still outstanding can be reported beyond seven years, however.