Settlement of Consumer Protection Lawsuit Against Tax Network USA & Partners, Inc. for Deceptive Mailers

Sonoma County District Attorney Carla Rodriguez, along with the District Attorneys of Napa, San Diego, and San Francisco Counties, announced today the settlement of a consumer protection action against Tax Network USA & Partners, Inc. (“Tax Network”), a California-based tax relief company. During the time period at issue in this case, Tax Network marketed its services by sending unsolicited mailers to taxpayers who had at one time been subject to outstanding tax liens. As alleged in the complaint, the mailers were deceptive because they implied a connection with or approval or endorsement of government agencies, including the local county recorders offices and taxing authorities, which Tax Network did not have.

 “When consumers receive official-looking mail, they often mistakenly rely on the statements in the mailer and act with fear and urgency without realizing they’re dealing with a nongovernmental business. This causes confusion, and in some cases, real financial harm to consumers. Business & Professions Code section 17533.6 exists to prevent that kind of deception. This case highlights the responsibility businesses have to communicate with honesty and transparency,” said DA Rodriguez.

 California law regulates so-called government look-alike solicitations. With some exceptions that do not apply here, it prohibits any private company from using a seal, emblem, insignia, trade name, or other symbol or content that could reasonably be construed as implying connection, approval, or endorsement of any federal, state, or local government, or military or veteran organization, unless the company has express connection with, or approval or endorsement of, the government or military entity.

The complaint alleges that Tax Network violated this law by sending mailers like the one depicted below, without the approval of government officials:

For an accessible version of this notice, please see the ADA-compliant PDF linked here. (PDF, 106 KB)

The Complaint alleges that these mailers violated the law against government look-alike solicitations by, for example: displaying what appeared to be a county seal; conveying warning messages that appeared to come from governmental agencies, such as “Notice of Tax Lien” and “failure to respond may result in further collection actions being taken against the debtor”; and using urgency language such as “a judgment has been filed against you for unpaid taxes,” and “a lien has been filed causing this balance to be categorized as seriously delinquent.”

The Complaint was filed in Sonoma County Superior Court.  Under the terms of the stipulated judgment, Tax Network is prohibited in the future from sending direct mailers that appear to be connected to a governmental agency, or that could imply that the government will take action if the recipient fails to respond to the mailer, and from including any information about a taxpayer’s outstanding tax lien if its accuracy has not been verified through the exercise of diligence based on publicly available information within four weeks prior to sending the mailer. Without admitting liability, Tax Network also agreed to pay a total of $400,000 in civil penalties and investigative costs (an amount that will increase if payment is not made in a timely fashion). Tax Network cooperated in the investigation.

The case originated from a complaint by a Sonoma County resident to the County Clerk-Recorder-Assessor Department, which regularly refers complaints and suspicious activity to the District Attorney’s Office for investigation. 

Deputy District Attorney Katy Yount was the prosecutor for the Sonoma County District Attorney’s Office. 

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