In an interesting case out of California, the Federal 9th Circuit ruled that a debt collection company that collects debts on behalf of several counties can be sued. (Thanks to the San Jose Mercury News for this story.) The debt collector, American Corrective Counseling Services, collects debts on behalf of District Attorneys throughout California. When someone has written a bad check, instead of being prosecuted criminally (yes, it is a crime in California), these people collect it on behalf of the DA and the merchant gets paid back. The company, of course, says it will appeal.
I am not surprised at this ruling. The FDCPA and California’s Rosenthal Act have very specific exceptions for certain entities. A private debt collector collecting on behalf of a government agency is not an exception. Thus, it would make sense that you can sue these people.
Remember, if someone is attempting to collect a debt, you need to ask who they are and then ask for validation of the debt. Make sure they follow the rules!