You better pay E-ZPass: Debt collectors can pursue unpaid tolls, appeals court rules

If you stiff E-ZPass, you won't get a pass from debt collectors.

The U.S. Third Circuit Court of Appeals ruled Tuesday that unpaid highway tolls aren't covered by a federal law that imposes limits on third-party debt collectors. That's because tolls are like taxes that fall outside the scope of the law, the three-judge panel unanimously ruled.

The case stemmed from a claim made by Thomas St. Pierre, a New Jersey resident who racked up $1,200 in unpaid tolls through his E-ZPass account, according to a summary of the case. E-ZPass hired Retrieval-Masters Creditors Bureau, a private debt collection agency, which sent St. Pierre a collection letter in June 2014.

St. Pierre's name, address, account number and a "quick response" code were visible through the envelope window, and St. Pierre claimed that disclosure violated the Fair Debt Collection Practices Act (FDCPA), which prohibits any language other than the debt collector's address from appearing on a collection letter envelope. The circuit court ruled that St. Pierre would have had standing to challenge that alleged violation.

But the tricky issue before the court was whether highway toll obligations fall within the scope of the fair debt act, which was passed in 1977 to rein in abusive practices by debt collectors. The law defines "debt" as that which comes from "transactions" for "personal, family or household purposes."

The appellate panel ruled drivers pay tolls in exchange for public transportation projects, not personal access to highways and bridges. Therefore, the tolls are not covered by the act, the court found. The ruling upheld a March 2017 decision to dismiss the complaint by the U.S. District Court of New Jersey.

"It is clear that what St. Pierre receives in exchange for the payment of highway tolls is not the private benefit of a 'personal, family or household' service or good, but the very public benefit of highway maintenance and repair," Circuit Judge Cheryl Ann Krause wrote in the opinion of the court.

Carlos Ortiz, an attorney for Retrieval-Masters Creditors Bureau and a partner at Hinshaw & Culbertson, said he and his client "couldn't be more pleased with the ruling."

"In this case of first impression, the Third Circuit's extensive and well-reasoned decision that toll charges are not considered consumer debts covered by FDCPA clarifies the scope of the FDCPA and relieves debt collectors of a potentially significant liability under the Act," he said in a statement.

Michael Quirk, a lawyer for St. Pierre, had argued the highway obligations met the "transaction" threshold because St. Pierre could have chosen to avoid toll roads. The court agreed with Quirk on this point, but determined that the tolls pay for transportation projects, not access to New Jersey's highways and bridges.

Quirk, of Berezofsky Law Group, said he was disappointed with the result, but said "the court issued a very well-reasoned opinion on a conceptually challenging issue."

"The loss of FDCPA coverage means these consumers may be subject to a wider range of abuse of debt collection practices without having a remedy for them," he said.