How Private Debt Collectors Cash in Posing as the Government

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http://www.alternet.org/rights/131118/jail_time_for_a_%2414_bounced_check_how_private_debt_collectors_cash_in_posing_as_the_government/

Jail Time for a $14 Bounced Check? How Private Debt Collectors Cash in Posing as the Government

By Mosi Secret, ProPublica. Posted March 12, 2009.

American Corrective Counseling Services uses threats and coercion to cash in on consumers on behalf of district attorne


With the seal of Santa Barbara County’s district attorney on its cover, the envelope caught Jennifer Osborn’s attention immediately. And when she opened it, Osborn read something startling: She was being accused of a crime.

Osborn, the letter alleged, had "violated criminal statutes by issuing a bad check." She faced as much as a year in jail and a $2,500 fine unless she made good, paid an additional $215 in fees and spent a Saturday at a "financial accountability class."

The letter stunned the 20-year-old college sophomore. Osborn was unaware that a $92 check she’d written to her school bookstore had bounced, the result of a mix-up with her mom, she said. "Failure to pay in full and schedule class within TEN DAYS from the date of this Notice may result in your case being forwarded for criminal prosecution," the letter threatened.

Alarmed, Osborn signed up for the class. But there were some things she didn’t know at the time.

Despite the official seal, the letter wasn’t sent by the DA's office. Osborn had no obligation to attend a class to avoid prosecution. And there was virtually no chance she’d be charged with a crime – in fact, the DA’s explicit policy was not to consider prosecution for bounced checks under $100.

Osborn is among the approximately 2 million people a year who receive similar letters (PDF) from American Corrective Counseling Services, a privately held firm that has turned bad checks into a thriving business. The California-based company has deals to run "diversion" programs on behalf of some 150 county DAs. In return, the DA offices get a cut of the fees.

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