Washington Lawsuit Scrutinizes Use of Prosecutor’s Seal on Debt Collection Letters

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A federal class action lawsuit in Seattle alleges that a collection agency used the King County prosecutor’s seals on debt collection letters to consumers, while failing to disclose that the letter was from a collection agency and not a law enforcement office. The plaintiffs say they received seemingly official letters from Bounceback; the letters included threats of “criminal charges,” “criminal prosecution” and jail time if consumers didn’t pay the amount of the debt and more than $180 in fees.

It’s already clearly established under the Fair Debt Collection Practices Act that debt collectors can’t threaten consumers with fines, criminal prosecution or jail time if they don’t pay their debts. But in this specific case, Bounceback was able to use the county prosecutor’s seal on these collection letters because it participates in a “check enforcement program.” County prosecutors rented out the prosecutor’s seal and letterhead to Bounceback in exchange for a cut of the collection fees, the lawsuit alleges.

“Bounceback enters into contracts with prosecutors purportedly permitting it to operate in the prosecutor’s name, and it pays the prosecutor a fee for each successfully collected check,” the complaint states. “Prior to Bounceback initiating its collection activities, the local prosecutor neither conducts any investigation of a particular check writer, nor makes any individualized determination regarding either probable cause or the likelihood of prosecuting a check writer who does not pay the Bounceback fees and participate in the ‘Diversion Class.’”

This isn’t the first time Bounceback has been involved in a check enforcement program in the Pacific Northwest. The Missouri-based collection agency was being considered by the Multnomah County District Attorney’s Office in Oregon for its check enforcement program. But in June 2013, Oregon Governor John Kitzhabersigned into law SB 525, which ended the state’s check enforcement program, effective January 1, 2014.

Bounceback Inc., and its parent company Stone Fence Holdings, are not members of the collections industry trade group ACA International.

Privatized check enforcement programs were launched around the country in the late 1980s, but didn’t come to Washington until around 2000. Currently, approximately 300 prosecutors’ offices nationwide – nine of which are in Washington – take part in the program. In 2013, the Washington legislature tried to pass a bill prohibiting the practice in the state.

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Posted in Accounts Receivable Management, Collection Laws & Regulations, Collection Technologies, Daily, Debt Collection, Debt Collection News, FDCPA, Featured Post, Gov't Receivables, Mail Services, Washington .

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  • avatar todd bean says:

    LOL, enjoy paying 10 times whatever you collected by using that seal. Amazing in this day and age and the information that is out there for consumers to find with a click of a mouse, idiot debt collectors still think they are going to get away with this.

    When will you guys learn that you will get away with it 99% of the time, but that 1% of “the wrong consumer” that you will eventually run into will quickly wipe out those profits ten fold and make you famous (for all the wrong reasons) in the process.

  • avatar Jeffrey Weinstein says:

    Although I am now retired (due to health issues) I was a member of this industry for nearly 20 years. I started out as a collector and worked several jobs over time, ending up as the manager of analytics and strategies for a large collection agency/law firm (over 300 employees at the time). So my opinion is not one that is from a disgruntled debtor. I can see both sides of these issues.

    I love the industry – at least the part of it that operates in a fair and above board manner – because it IS true that without collectors, everyone would end up paying more for everything.

    However, there are some practices that I don’t like, such as the one in this article. It is wrong to allow a private company the power to make consumers believe that if they do not pay a particular bill, they are going to jail. It is also wrong to add excessive fees to a debt. Many of these fees were born of the best of intentions – to cover the costs an institution faces when a customer bounces a check, pays a bill late, etc. However, they have since become a profit center and the fees are getting bigger and bigger, with no end in sight. Consumers really ARE damaged by this sort of thing. The $180 fee may seem reasonable to the people who own the company in question, but it amounts to a half a week’s pay for those at the lower end of the economic ladder and that is just wrong. That is not about covering costs, it is simply punitive.

    Practices like these and Zombie Debt are driving much of the bad publicity the industry receives. I know there are many in the industry who would disagree with me, but it is my sincere belief that these types of practices are going to do more harm than good to the collection industry, especially as demographics would seem to indicate that conservatives are becoming a shrinking minority in this country.

    Imagine Elizabeth Warren in charge of the financial industry, or even as President. Scary thought, huh? There is little doubt about who’s side she is on. Ms. Warren, and others who share her views, may increasingly have the power to regulate this industry. And unless we do a better job of self-regulation, they will have an easy time of it. The higher the number of outrageous examples they can point to, the more support they will have to implement their agenda. And that will not be an agenda that is in the best interests of our industry.

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