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Crosscut Investigation: Prosecutors, debt collectors buddy-up to punish bad checks

Why are state prosecutors contracting with private check companies to send letters threatening legal action and hundreds of dollars in fines to those who wrote a bad check?

Sen. Adam Kline

Sen. Adam Kline

A month-long Crosscut investigation into questionable tactics by check collection companies reveals that criminal prosecutors around the Northwest are contracting with private companies, which use prosecutors’ names and letterhead to send threatening letters to thousands of people who’ve bounced checks.

The collection companies demand payment that includes what can amount to hundreds of dollars in discretionary fees for each check and threaten criminal prosecution if recipients don’t pay the fines. They have collected hundreds of thousands of dollars in Oregon and Washington during 2011, only about half of which went to pay back businesses for the bounced checks.

Perhaps you are one of the thousands of people who bounced a check in Washington and Oregon this past year and failed to make good on it. If so, you may have received an ominous letter bearing the letterhead and name of your county criminal prosecutor. It’s a frightening piece of mail, because most likely you’re a law-abiding person who made the dumb but not uncommon mistake of writing a check on an account with insufficient funds while in a tight financial spot.

The letter informs you that the prosecutor’s office received a complaint against you that may result in a criminal charge. You’re told you can avoid prosecution if you immediately send the prosecutor’s office full payment for the check amount, plus as much as $300 in fees, and attend a training course on financial responsibility.

What people receiving these letters don’t know is that the letter didn’t actually come from the prosecutor’s office. It was sent by a private collection company that contracts with the prosecutor, typically paying the prosecutor’s office a fee for each successful collection case.

The letter recipients also don’t realize it’s highly unlikely they will be prosecuted if they don’t pay and don’t take the course -- unless they wrote multiple bad checks and there was strong evidence of deliberate fraud, such as writing a check on a closed account. In Multnomah County, for instance, only 27 bad check cases were prosecuted from 2010-2012.

Now two key lawmakers in Washington and Oregon are questioning the legality and fairness of these privatized check collection programs set up by prosecutors in at least nine Washington counties, including Pierce (Tacoma) and Spokane, and at least four Oregon counties, including Multnomah (Portland).

State Sen. Adam Kline, D-Seattle, chairman of the Senate Judiciary Committee, met Thursday with representatives of the Washington Association of Prosecuting Attorneys to decide whether to seek legislation prohibiting or reforming these programs.

Kline objects to what he sees as the deceptive nature of the letters and that prosecutors do not look for evidence of criminal intent before alleged bad check writers are threatened with prosecution. “These companies are sending out a letter with the prosecutor’s name and signature that purports to be that of the actual prosecutor, and the prosecutors are letting them do it,” he fumes. “Both state and federal law say collection agencies can’t pretend to be someone else.”

In Oregon, Senate Judiciary Committee chairman Floyd Prozanski, D-Eugene, a prosecutor who first learned about these check enforcement programs when contacted by this reporter, has asked his staff to draft reform legislation while he gathers more information from prosecutors. “I have a concern about a private entity that’s collecting debts being allowed to use a government seal to represent itself as something it isn’t,” he says.

But other prosecutors say these check enforcement programs are needed because merchants — ranging from giants like Costco and Target to mom-and-pop businesses — receive lots of bad checks and law enforcement agencies lack the resources to investigate and prosecute these cases and ensure the merchants get paid. Nationally in 2009, Americans wrote $127 billion worth of checks that were returned, according to Federal Reserve data.

“In a time of dwindling resources, when police and prosecutors have had a lot of budget cuts, this program affords the opportunity for people to get restitution and justice they wouldn’t be able to pursue otherwise,” says Jack Driscoll, Spokane County’s chief criminal deputy prosecuting attorney. His office started a privatized check enforcement program ten years ago.


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Comments:

Posted Wed, Dec 5, 11:20 p.m. Inappropriate

Thank you for the article. So, are the prosecutors working for the citizens, or for businesses? There should be no privatization of any part of the public law enforcement/legal system.

jhande

Posted Thu, Dec 6, 8 a.m. Inappropriate

"But both Prosecuting Attorney Dan Satterfield and his predecessor Norm Maleng..."

unfortunately for the copywriters, its Satterberg.

Great piece!

crossgab

Posted Thu, Dec 6, 9:35 p.m. Inappropriate


As an attorney and former Deputy Prosecutor, this is beyond the pale and raises significant ethical issues which the State Bar Association should address. Hopefully, you can do a follow on story that informs us of the outcome.

Posted Fri, Dec 7, 10:55 p.m. Inappropriate

Except for the hollow threats (let's be honest - lies) and possibly mis/under-representation (now who's being fraudulent?) isn't this a win-win?

Private enterprise comes up with a way to efficiently and effectively outsource something in a way that doesn't cost tax-payers and might even save tax-payers money? Something that has the support of small business, big business and local government?

Perhaps they (collection bureaus) need to clean up their act (and those local governments need to require better transparency) but it's not hard to balance a checkbook. If it is, you should be paying with cash. Which might just be your only option if businesses just stop accepting checks.

tvjames

Posted Sat, Dec 8, 2:41 p.m. Inappropriate

Very informative. How many honest debt collectors do you think exist? Now we find another paragon good ethics prosecutors in bed with the low life's in the collection industry. If a business chooses to take a check it is purely a business decision. The business needs to accept the risk and employ what ever civil means it wants to collect the bad check. The coercive power of the state should not be used in the regular course of business to collect debt. Many years ago, I recall listening to the owner of a rent to own business complaining the prosecutor's office would not prosecute his bad check cases. My thought at the time was turn it over to collection if you have a problem. There is such a thing as prosecutorial discretion. If they are not going to prosecute bad check cases in general that should be the end of the matter. There is a perfectly good civil remedy. The bar association should be investigating any prosecutor involved in such a contract. To lend their name to activities for which they are not supervising is deceitful and dishonest at the very minimum.

bartlet

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