Collectors 'Rent' DA Seals, Class Claims
SEATTLE (CN) - A collections company "rented" county prosecutor's seals to threaten consumers with jail time unless they paid alleged debts, and gave the prosecutors a share of the collection fees, three women claim in a federal class action.
Lead plaintiffs Wodena Cavnar, Rosaline Terrill and Linda Parks sued Bounceback, its parent company Stone Fence Holdings and director Gail Krieg on July 18, alleging violations of the Fair Debt Collection Practices Act and Consumer Protection Act.
Cavnar claims Bounceback uses the seal and letterhead of county prosecutors to coerce consumers into paying for allegedly bounced checks plus substantial collection fees.
The plaintiffs say they received seemingly official letters containing a "warning of criminal charges," and "criminal prosecution" if they did not pay the amount of the check and more than $180 in fees.
Bounceback failed to disclose the letter was from a collection agency and not a law enforcement office, the complaint states. The demand letters contain a toll-free number supposedly to the local prosecuting attorney's office, but actually for Bounceback, according to the complaint.
"What plaintiffs did not realize was the letters were actually sent by defendant Bounceback Inc., a for-profit debt collection company based in Missouri," the lawsuit states. "Bounceback's operations are much like those of any other high-volume debt collector: It solicits its business from large national retailers and other merchants, receives electronic information about unpaid checks directly from those merchants, and sends out standardized collection notices to consumers.
"There is one crucial difference, however: Under Bounceback's so-called 'Check Enforcement Program,' county prosecutors rent out the prosecutor's seal and letterhead to Bounceback in exchange for a cut of the collection fees, thereby cloaking ordinary civil debt collection under a sham 'criminal diversion' program. Consumers who receive Bounceback's letters are led to believe they are from the prosecutor, not from a private collection agency."
The plaintiffs claim prosecutors have "no meaningful control" over Bouncebacks's collection activities and have not investigated whether the unpaid check was written with criminal intent or was "simply an innocent mistake."
"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. 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,'" according to the complaint.
Bounceback made numerous misrepresentations, in violation of state and federal laws, the complaint says.
Privatized check enforcement programs are legal in Washington and allow companies to contract with county prosecutors in exchange for a fee or percentage of collection charges. Oregon recently banned public agencies or officials from allowing debt collection entities to use official seals or letterheads.
The plaintiffs seek class certification, return of all unlawful collection fees, and statutory, treble and exemplary damages for violations of the Consumer Protection Act.
They are represented by Erika L. Nusser with Terrell Marshall Daudt & Willie.