Class action suit filed against city’s biggest private tax collector

One of Jefferson County’s largest private tax collectors has been named in a class-action lawsuit.

A brief filed Jan. 22 in Jefferson County Circuit Court by attorney Ben Carter alleges that the tax collector Marliyn Hartley, while doing business as “DETCO,” charged “excessive and unlawful interest, attorney’s fees, administrative fees, servicing fees, and costs” to some 460 plaintiffs, who claim they were bilked out of hundreds of thousands of dollars in unlawful interest charged to their accounts. The suit seeks, in part, to prevent Hartley from collecting any more money from the plaintiffs, in addition to granting attorney’s fees, court costs, interest and damages against Hartley. The suit also seeks a trial by jury.

Under Kentucky law, government bodies can sell unpaid property taxes to third parties such as Hartley’s DETCO, which in are in turn authorized by the state to collect that money from debt holders. Last year, new state regulations were enacted that explicitly prohibit third-party private debt collectors from engaging in abusive practices like charging exorbitant interest rates and which strengthen disclosure requirements.

According to the suit, Hartley has been a regular purchaser of Certificates of Delinquency — documents sold by the state that authorize third parties to collect taxes — for the past three years; however, the scope of the suit concerns 460 Certificates of Delinquency purchased by Hartley from the Jefferson County Clerk’s Office since April 23, 2012 — the date on which new regulations took effect. The Jefferson County Clerk’s Office lists Hartley’s DETCO as having purchased 508 certificates in 2012, more than any other private collector, and having recovered the largest sum in liens, at $729,035.

The meat of the complaint concerns 69-year-old James C. Brown, a retired member of the U.S. Army Corps of Engineers. According to the filing, Brown failed to pay property taxes in 2011, which Hartley purchased via a Certificate of Delinquency to the tune of $917.

The suit alleges that Hartley failed to notify Brown of the transaction as required by state law, in addition to failing to provide Brown with a suitable means of contacting her. In the process, the plaintiffs claim Hartley awarded herself interest and other miscellaneous fees as due dates on the tax bill came and passed.

A copy of the complaint can be found here.

LEO’s Anne Marshall has written extensively about the domino-effect that third-party purchasers of debt can have on people’s lives, most recently in a July 4, 2012, story, “Lien Times.”