Respectfully submitted by Lawrence Rafferty (rafflaw)-Guest Blogger

I have to admit that I do not shock too easily. However, when I read an article this morning in the New York Times, I was taken back by the news. It seems that private debt collection companies across the United States have partnered with District Attorneys offices, to use the threat of criminal charges being filed against consumers in attempts to collect on alleged bounced checks to merchants. The fact that people were being threatened by collection companies did not surprise me. It was the fact that the veiled threats to the consumers were sent on District Attorney or Prosecutor letterhead that amazed me!

“They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors for a class on budgeting and financial responsibility, some of which goes back to the district attorneys’ offices.” New York Times

Maybe I am just naive, but does it make sense for the DA’s office to outsource the job of investigating and prosecuting alleged perpetrators of bounced checks to private companies who may or may not actually investigate the bounced check circumstances before “official” threats of criminal prosecution are sent out? Prosecutors involved in these arrangements claim that the process saves taxpayer money and saves time in their office.

“Debt collectors have come under fire for illegally menacing people behind on their bills with threats of jail. What makes this approach unusual is that the ultimatum comes with the imprimatur of law enforcement itself — though it is made before any prosecutor has determined a crime has been committed. Prosecutors say that the partnerships allow them to focus on more serious crimes, and that the letters are sent only to check writers who ignore merchants’ demands for payment. The district attorneys receive a payment from the firms or a small part of the fees collected. “The companies are returning thousands of dollars to merchants that is not coming at taxpayer expense,” said Ken Ryken, deputy district attorney with Alameda County.” New York Times

These private collection companies are requiring people to pay the money owed on the bounced check, along with an administrative fee and in many cases an expensive budgeting class. All under the cover of the official letterhead of the partnering District Attorney or State’s Attorney’s office. I can understand merchants looking for creative ways to recoup the losses they suffer from bounced checks, but attorneys representing consumers see the issue differently from the collection companies.

“Consumer lawyers have challenged the debt collectors in courts across the United States, claiming that they lack the authority to threaten prosecution or to ask for fees for classes when no district attorney has reviewed the facts of the cases. The district attorneys are essentially renting out their stationery, the lawyers say, allowing the companies to give the impression that failure to respond could lead to charges, when it rarely does. “This is guilty until proven innocent,” said Paul Arons, a consumer lawyer in Friday Harbor, Wash., about two hours north of Seattle.” New York Times

Are these “partnerships” between debt collection companies and District Attorney offices another example of the privatization of government duties? Do you think that prosecutor’s letterhead should be rented out to private companies to provide them with the appearance of governmental authority? While this type of arrangement was news to me, it isn’t a new process. It goes back to at least 2006 when Congress passed a law allowing District Attorneys offices to make these arrangements and consumers started complaining in 2009 as shown by this couple’s statements.

“Both acknowledge they wrote two bad checks, totaling about $200, as they were moving from Florida to Michigan in late 2007. The bad checks, they say, were mistakes. But nearly a year after they settled in a Detroit suburb, letters and phone calls followed from Florida. “They told me they were part of the attorney general’s office,” Michelle O’Neil told CNN. “And that was scary in the sense that I’ve never had any legal problems. I’m a teacher.” But the calls weren’t coming from a state agency. They were coming from a company hired by a Florida county prosecutor’s office to collect on bounced checks.

The firm — American Corrective Counseling Services, or ACCS — splits the money it collects with the prosecutor’s office. But it also makes money from financial management courses that people who wrote the checks are required by law to attend at their own expense. And the company’s contract with the prosecutor’s office states those classes are its “principal business activity.” ‘ CNN

My kids always tell me that I am behind the times, and I guess this years old issue slipped past me for several years. I think it may be time for Congress to take another look at the 2006 law that allows District Attorney offices to make these kind of arrangements. When the force of law is used to extract much more than just past due monies, then it goes too far. The governmental process of enforcing the law should never be privatized, in my opinion. Do you think corporations can be trusted to diligently review each bounced check to insure that their threatening letters on District Attorney letterhead is being sent to people who intended to bounce a check? What do you think?

Additional Sources: ProPublica; Fair Debt Collection Practices Act; Amazon AWS

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