Collection Agency Settles Class-Action Lawsuit for $2.55 million
A collection agency in California that specialized in checks agreed to a $2.55 million settlement in a class-action lawsuit, the first in a string of lawsuits the now-bankrupt company is facing.
A California check collection firm Monday agreed to a $2.55 million judgment to settle a class action lawsuit in Pennsylvania. It is the first in a series of lawsuits against the company.
American Corrective Counseling Services (ACCS), based in San Clemente, Calif., agreed to the settlement Monday in a Delaware bankruptcy court, according to the Associated Press. The company did not admit any wrongdoing.
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ACCS filed for bankruptcy protection in January of this year.
The lawsuit said that the company sent out letters to citizens that had bounced checks at various businesses. The letters appeared to come from district attorney offices around the state of Pennsylvania, warning the recipients that they were under criminal investigation for bouncing checks. ACCS said that they could clear up the matter if the consumer paid the debt with a penalty and attending a one-time education course.
Although ACCS was contracted with 20 different district attorneys in the state and the letters were legal, the civil lawsuit noted that it was a deceptive and unethical practice to threaten consumers with criminal action when none was likely to be forthcoming.
Approximately 15,000 Pennsylvanians were represented in the lawsuit by the Community Justice Project in Pittsburgh, according to the AP. Since ACCS cannot pay the $2.55 million settlement, the Project hopes to get the money from the company’s insurer.
ACCS faces more class-action lawsuits in California, Florida and Indiana.
In late 2007 and early 2008, ACCS lost a series of cases that exposed it to civil lawsuits. The firm argued that it was shielded from civil cases due to its business relationships with public offices (“ACCS Defends ’Sovereign Immunity’ Case as Public Citizen Mulls Class Action Suit,” Feb. 11, 2008). But after the company lost two cases where it was ruled that they were subject to lawsuits, consumer attorneys began to amass classes to go after ACCS.
Officials with ACCS could not be reached Wednesday for comment. But an ACCS official told insideARM last year that district attorneys were on their side in the matter.
"If we’re guilty, the DA’s office wouldn’t have been there arguing on our behalf,” ACCS Senior Vice President Kirk Barrus told insideARM, referring to a "friend of the court" brief filed on behalf of ACCS by an attorney with the California District Attorneys Association.
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Comments
Comment from Anonymous on November 4, 2009 at 12:20PM EST
More bait for consumer attorney sharks.
Comment from Uncl Lar on November 4, 2009 at 12:22PM EST
Stupid is as stupid does. They got what they deserved for dipping into the grey areas.
Comment from Anonymous on November 4, 2009 at 1:16PM EST
Refreshing turn of current events IF the DA office was actually "arguing on their behalf"...
Hard to believe if criminal actions were never taken...?
Comment from Anonymous on November 4, 2009 at 1:24PM EST
1) The letters were legal.
2) Bouncing a check in the state of Pen. is a crime.
3) The DA's are on thier side.
Why on earth would you settle?
Comment from DONALD DALY on November 4, 2009 at 1:34PM EST
15,000 "CITIZENS" ISSUED/WROTE WORTHLESS CHECKS THEN DUCKED AND RAN FROM HONORING THOSE CHECKS AND A COURT DECIDED TO IGNOR THE ACTIONS OF THOSE 15,000 AND THAT ALTHOUGH THE LETTERS WERE LEGAL AND HAD THE FULL SUPPORT OF 20 D.A. OFFICES THE RECOVERY EFFORTS WERE "DECEPTIVE AND UNETHICAL"??? I NEED TO UNDERSTAND THE DIFFERENCE BETWEEN ACCS AND THE 15,0000???
Comment from Anonymous on November 5, 2009 at 11:30AM EST
15000 individuals walked into a business for goods and or services without paying. Once the banks notified these consumers and they did not honor the checks, which is clearly evident, it is just as good as stealing. When is the government going to protect the business owners. Just love our legal system as it rewards the criminals especially when bouncing a check and not making good on it is a crime in many states.
Comment from Anonymous on November 5, 2009 at 12:21PM EST
This countrys moral compass is worth spit these days. Not only do you have to worry about bringing in business, you have to worry about your scam artist customer ripping you off and then suing you or your vendors for fighting back. The one comfort I have in scammy debtors is "you reap what you sow"!
Comment from Anonymous on November 5, 2009 at 4:31PM EST
Any DA who subscribed to this check recovery program with ACCS was as guilty as ACCS in violating the FDCPA. Your local DA dipped into the ARM industry arena to make money for a service we already were providing to business owners. Prior to the arrival of ACCS and there illegal tactics most states had civil laws to penalize the consumer for return checks. Some states as high as three times the amount of the check. Shame on our elected officials, they took money away from the ARM industry.