How to Use the Attorney General to Go After Bad Clients

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One of the frustrations I hear about from entrepreneurs is getting stiffed – either they paid a company to do a job and they didn’t perform, or they did a project or task for a client and they didn’t pay. In many of these situations, the amount in question is low enough that it’s not worth it to hire a lawyer or even put in the time and effort to take the other side to small claims court.

Even if a client hires us to send a demand letter, there’s always the risk that the other side won’t comply, and then they’ll be in the same position as before, but now they have our bill to pay too.

If the client in question is a business, there may be options to go after them through the government at no cost to you.

Attorney General Consumer Complaints

Check the Attorney General’s (AG’s) Office website for the state where your non-performing client lives (not where you live if you live in a different state). For every state that I’ve checked for a client to date, the AG’s Office has had a division or at least a page on their website for consumer complaints. Typically, it’s a form where you provide your contact information, a summary of the situation, and the remedy you want.

If the AG’s Office thinks your complaint has merit, they’ll investigate the situation, including them sending a copy of your complaint to the company and with a firm deadline for providing a response. Even if your client didn’t respond to a demand letter from you or your lawyer, they will likely be more inclined to respond to the AG’s Office.

In my experience, companies are motivated to resolve these matters quickly and avoid the risk of having fraud charges filed against them. This may result in the client paying you, performing as they were supposed to, or giving you your money back.

Pros and Cons of Going Through the AG’s Office

Pro: It’s free to file a complaint. You don’t need a lawyer to do it; however, it may be prudent to have a lawyer help you fill out the form to make sure you’re presenting the most compelling argument in light of the applicable laws. Your lawyer may know the key phrases to use to convince the AG’s Office to take your complaint more seriously than if you’d written it by yourself.

Con: You have less control over the situation. If the AG’s Office pursues the matter and files a complaint in court against your client, you will not be the plaintiff. The state will be the plaintiff. You will be less involved in the negotiations and settlement (assuming there is one).

Pro: It’s less work for you. If you were pursuing this matter directly against your client, such as filing a lawsuit, there could be meetings and calls with you lawyers, documents to review, and other work where you would need to be involved. Or if you were doing it on your own and going to small claims court, you would still have to prepare your Complaint (lawsuit), file it, get the other person served, and show up for your court date.

The AG’s Consumer Complaint is the Hidden Alternative

Most people I’ve spoken with about these types of business challenges, don’t know about Consumer Complaints. I’ve suggested it at least three times in the last two weeks to friends and clients alike. I can’t say this option is available in every state, but it’s worth investigating if you have a non-performing client that’s a business.

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