Antitrust Law Daily Wrap Up, ANTITRUST NEWS: New Jersey Commission uncovers online tax lien sales monopoly, (May 5, 2016)

By Greg Hammond, J.D.

The New Jersey State Commission of Investigation (SCI) has found that a vendor who was selected by state officials has effectively monopolized online lien auctions on a statewide scale, according to a report issued Tuesday.

The SCI opened an investigation into online lien auctions after State Sen. Shirley Turner (D-Trenton) raised concerns that the interest rates associated with liens from unpaid residential taxes and municipal fees are exorbitant and unfairly burdensome to property-owners struggling with various economic issues. The vendor that state officials picked ended up conducting the online auctions and has retained most of the revenue, the report found. In addition, the SCI concluded that New Jersey failed to conduct more than minimal due diligence—leaving local officials in the dark about the background, corporate structure, and ownership of this partner company—and that evidence suggests discrepancies, including apparent conflicts of interest, in the promotion of the partner firm among public officials responsible for tax sales at the local level.

“Apart from these and other issues of concern, it appears that, based upon somewhat limited experience to date, the actual online lien auction process can be conducted in a fair and orderly fashion and can exhibit and/or allow for the possibility of certain efficiencies and other attributes that should not be overlooked as action is taken to address the findings of this investigation,” the report states.

In particular, the SCI recommends that the Governor and New Jersey Legislature: (1) immediately evaluate the online auction pilot program; (2) require open competition for online auction vendor approvals and contracts; (3) provide adequate guidance to local governments; (4) require disclosure of contract vendor/subcontractor ownership; and (5) make possible improvements in the conduct of tax lien sales, including protections for property owners.

News: Antitrust NewJerseyNews