Law Lets Government Agencies Keep Unlawful Fees

The state is stealing millions from the public, claims lawyer launching class action suit.

Tens of millions of shekels were collected illegally from the public last year by government agencies such as the Israel Broadcasting Authority, the Israel Lands Administration, the Transportation Ministry and the Tel Aviv municipality. But the law protects them from having to make restitution even after they admit to overcharging.

In one case, the IBA overcharged Israelis by NIS 13 million in 2011 and 2012 for legal fees associated with issuing warning letters to television license-fee scofflaws. Two months ago, in response to a class action lawsuit, the state broadcaster told the Tel Aviv District Court it would stop demanding the fees for its lawyers.

In the class-action suit, attorneys Nitzan Gadot and Doron Radai claimed the IBA charges NIS 116 for dunning letters, despite a NIS 17 cap on such charges. Within 90 days after the suit was filed the agency told the court it would stop overcharging, but it was not required to reimburse money it had already collected.

By responding within 90 days the IBA adhered to the terms of the Class Action Law, according to which government agencies are not obligated to return funds collected above the legal maximum if they inform the court within the allotted time that they will cease the illegal practices.

“The legislature gave state agencies a sort of immunity, because its public money. If the authorities were required to return the amounts collected the public purse would be harmed,” Gadot explained. “Tens of millions of shekels are collected illegally − stolen from the public − and are left in the hands of the authorities.”

The Radai-Gadot Law Office has filed more than 20 suits against government agencies in recent years, including the courts administration. “People billed by a local authority assume the bills are correct and don’t bother checking them,” Gadot said. “When we receive a bills to check we often find calculation errors and mistakes in interest charges.”

Judges are authorized to require state agencies to reimburse the public for excessive amounts collected in the two years prior to the filing of the suit. Radai and Gadot said they have never come across a situation in which the agency did not announce that it would stop overcharging, or in which the judge did not approve such an announcement.

That, however, does not prevent anyone who overpaid due to unlawful collection from demanding to be reimbursed. If the agency refuses the demand, the payer can file an individual claim.

Daniel Bar-On
Ofer Vaknin