Lawsuit alleges MT Secretary of State took thousands from residents, hasn’t returned it

HELENA (Daily Montanan) - A possible class-action lawsuit has been filed against the Montana Secretary of State’s Office alleging that it overbilled potentially thousands of customers, and even though it knew of the glitch, refused to issue refunds unless residents requested the money back in writing.

The suit, filed in Lewis and Clark County, said that for months, if not more than a year, the Secretary of State’s Office had software problems that created the potential to double bill – sometimes as much as charge four times the amount – customers using it for a variety of services, said attorney Rylee Sommers-Flanagan.

The complaint alleges that residents and businesses had no choice but to use the electronic portal created for then Secretary of State Corey Stapleton’s office, to transact business.

Secretary of State Christi Jacobsen’s office did not respond to requests for an interview about this story.

Helena, we have a problem

The issue began when several businesses noticed small duplicate billing on the credit-card statements. When customers complained, the lawsuit said they were only issued refunds if the customers requested in the money back in writing. Often that amount was small — $20 to $40.

Sommers-Flanagan said there could be hundreds of people or businesses which were charged and may not know about it – one of the reasons for the class action suit. Class action suits are usually brought when there are multiple people or businesses in the same situation and the amount of money doesn’t warrant an individual lawsuit.

According to the lawsuit, the Secretary of State’s Office knew about the glitch in its platform, which has since been switched, but opted only to give the money back if customers requested it. Meanwhile the court documents say the office kept the money which had been overbilled if if residents hadn’t noticed it or refused to ask for it in writing.

“Stapleton informed agency personnel that the agency’s policy was to issue refunds only in response to written requests,” the suit states, alleging that Jacobsen knew about the problem as early as October 2019 and hasn’t changed the state agency’s position.

“In some circumstances, employees have compiled lists of affected Montanans, but the decision was made at the highest levels not to return the money to its rightful owners,” the court filing alleges.

The overpayments or multiple payments happened in several different ways: Either customers clicked a payment button more than once, which could have initiated several transactions, or the payment processing system didn’t always match a daily batch reconciliation, which generated a message to the person that they had an outstanding amount due. Sometimes, the suit explains, they were charged again with a late fee.

Two secretaries, same result

The problem may have began as far back as October 2019, Sommers-Flanagan said. It’s difficult to tell because the Secretary of State’s Office hasn’t provided the information to trace the problem. That would have been during the administration of Stapleton who did not run for office again. His deputy, though, was Christi Jacobsen, the current Secretary of State.

Both secretaries require customers to use the portal system, and both required payment via a credit card – meaning that other payment types were not an option, Sommers-Flanagan said.

“The Secretary has state publicly that its digital payment system is error-free,” according to the court filing. “Customers have no alternative to using the error-ridden digital payment system.”

Previously, when the glitch was made public through reporting by Holly Michels of Lee Newspapers, the Secretary of State’s Office said the error was traceable to a specific version of web browser Google Chrome. It also said that approximately 1,200 transactions were refunded, and the problem fixed.

“In truth, many (if not all) affected individuals and businesses received refunds only if they identified the problem themselves and requested a refund in writing,” the suit said.

The lawsuit said the problem persisted before and after the public was made aware of the problem, and also “persuaded individuals and businesses that it would recognize and automatically refund duplicate charges,” which “misrepresented the scope of the problem and the sufficiency of the Secretary’s response to the problem.”

The scope of the problem could be significant. For example, at the end of fiscal year 2020, a miscellaneous revenue account had $120,000 that Sommers-Flanagan said could represent the overcharging.

“Even if they didn’t know what that money was, just a miscellaneous account with that much money should have had bells going off,” Sommers-Flanagan said.

Sommers-Flanagan said the challenge also comes down to that of time for individuals or businesses,

“There are trade-offs for businesses that are already scrambling – chasing a refund for $20 or even $80. What’s the time investment in order to request something like that in writing?” said Sommers-Flanagan. “A lot of people will weigh that.”

She said that because it was the Secretary of State’s error, residents shouldn’t have to jump through hoops when they were forced to use a failing system.

Sommers-Flanagan said that Montana law requires the Secretary of State to refund the money regardless of whether customers responded or even provided a written refund request. She said as long as the office was aware of the problem, it had a duty to return the money, especially because it offered no services or goods in exchange for taking the money.

“We also need to know where that money went,” Sommers-Flanagan said.