CorrectiveSolutions' Checkmate

Prosecutors nationwide team up with the San Clemente debt collector to terrorize consumers in ways both highly profitable and usually sketchy

It's hard to fault prosecutors for ridding themselves of a nuisance. Fraud charges require investigations, and most prosecutors have nowhere near the manpower to handle them, admits Scott Burns, executive director of the National District Attorneys Association. "The real issue is that prosecutors' offices are, almost across the board, underfunded, while suffering hiring freezes and, in some offices, up to 30 percent cuts in personnel," he says. "The only logical thing is to prioritize those cases and those issues that are the most important."

But by ridding themselves of a headache, they're creating a new one for consumers, who are presumed guilty without investigation or chance of appeal.

That's the basic sentiment of Ed Griffith, spokesman for the Miami-Dade Office of the State Attorney. He believes that if a check writer ignores contact by a merchant, that's proof enough of a crime. "Your failure to make good on that check is an issue of intent," he says. "The opportunity to make good and not take advantage of that opportunity speaks to your attitude."

Griffith argues that even innocent mistakes merit sentencing to financial-accountability class. "Even if someone says that their child overdrew their account, we believe putting them in a diversion program is the right move," he says.

Yet some believe the classes are just a ruse to generate fees. "Their financial-responsibility class is nothing more than learning how to balance a checkbook," says Adam Levin, New Jersey's former consumer-affairs commissioner. "It's garbage. If people aren't passing a bad check with intent, they shouldn't be going to a class. And if they are, they shouldn't be going to a class; they should be going to jail. Don't tax overburdened consumers with a course that is effectively worthless."

Dansky agrees. "There are far better ways of dealing with the problem," he says. "If the cases are truly baseless, then the prosecutors shouldn't be involved, period. Merchants can use debt collectors directly without getting prosecutors involved."

*     *     *

Joseph Ridout has a hard time believing that so many scam artists have chosen careers in bad checks.

"We believe that very few of the recipients of these letters intended to defraud the merchant," says Ridout, who works for Consumer Action, a San Francisco nonprofit. "It's just people who overdrew their checking accounts with a check. The curious thing is that it's a moment in time when banks have destigmatized overdrawing your account with a debit card. What's the difference?"

In fact, it was banker scheming that landed Carole Hirth in trouble last year. More than a dozen major banks have paid multimillion-dollar fines for reordering purchases and delaying deposits solely to generate overdraft fees. In Hirth's case, PNC was holding her direct deposits until it withdrew her outgoing charges—effectively overdrafting her account so it could charge extra fees.

She knew none of this at the time she wrote a $393.86 check to Dominick's, a Chicago grocery story. The 59-year-old was in the hospital being treated for Crohn's disease when the check bounced. For some reason, the store never tried to redeposit it, which most merchants do. If it had, says Hirth, the check would have cleared. Instead, the Safeway-owned chain sent her a letter.

"I had been back from the hospital for just four days when I checked the mail and thought, 'Oh, my God,'" she says.

Hirth went straight to Dominick's, wrote a new check and paid a $35 bounce fee. She considered the problem fixed. But four months later, she received a letter from the Cook County state's attorney. It said that she'd been accused of deceptive practices and that she faced up to a year in jail and a $2,500 fine. The only way to avoid this fate was to pay $649.86, which included penalties and a diversion course.

"I already paid them," Hirth says. "I contacted [the grocery store's] ethics department and said this was just wrong. I spend enough money there. I told them they should work with me. I told them to look up my Safeway card. I've been shopping with them for the past 30 years!"

Safeway said there was nothing it could do. She'd have to contact the state attorney's office. Hirth called the 1-800 number on the letter but got nowhere. "They accused me of committing a fraudulent act," she recalls. "They said that if I don't pay everything and take their class, I could be arrested and end up in jail. He was very, very mean. I told him that I didn't understand how that could happen. I said I'd already handled it, it should be cleared up, but he just went on and on and on."

Hirth wrote another letter to Safeway, begging the grocer to contact the prosecutor's office on her behalf. The letters and phone calls kept coming. It wasn't until she got in touch with Arons that she discovered she wasn't being threatened by Cook County. It was CorrectiveSolutions, which has contracts with 21 counties in Illinois.

In 2010, yet another class-action suit was filed against the company, this time on behalf of 600,000 victims in California and Pennsylvania. In November, it agreed to pay a $3 million settlement. But because the class was so big, each victim would receive less than $3. A federal court refused the settlement, ordering both parties back to negotiations.

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12 comments
goodearth1
goodearth1

Now this gives more insight as to how thousands of responsible people are becoming homeless. Citizens who've bounced a check are given a choice...jail time or homelessness. Very sad.

goodearth1
goodearth1

I need to clarify that the missed child support payment was not because I was absent-minded, it was because I had been laid off by a real-estate agency, backed by banks which filed bankrupcties that were financed by the U.S. Gov't. So, ultimately, I immediately owed $3,500 for a levy and threatened with jail time that was financed by the U.S. Executive Office.

goodearth1
goodearth1

Please believe her. Stores will not contact you first. And, it's not just happening with stores. It happened to me when I had missed one child support payment. The County levied every penny out of my checking ($700) and savings ($60) accounts, which produced over 21 checks bouncing. I had never bounced a check in my life. Almost immediately, with fees and fines, I owed more than $3,500 for "bounced" checks caused by a levy by the D.A. Then, I was threatened with jail time. The justice system is in the business of framing citizens.

rozier.karen
rozier.karen

Congress created a loophole in 2006, granting what amounts to immunity from deception charges for collection agencies working on behalf of law enforcement.

rozier.karen
rozier.karen

Consider it the privatizing of justice. Instead of investigating bad-check complaints, prosecutors simply pass them along to CorrectiveSolutions. The company then uses official DA letterhead to threaten jail time if consumers don't pay up. CorrectiveSolutions also runs the "voluntary" financial-accountability classes, and prosecutors get a cut of the profits while barely lifting a finger. The entire system runs on a one-size-fits-all presumption of guilt. No one's bothering to investigate whether the check writer was working a scam or merely suffering from a momentary lapse of mathematics.

rozier.karen
rozier.karen

More assaults against poor people -- In 2011, my attorney wrote a bad check for $1500 to me after the Judge ordered him to repay me. I filed a formal complaint to The State Bar of California.  They refused to do anything about it because he eventually made good on the check. He was not required to attend any diversion program.

I say fight it and sue.

mbw2
mbw2

From the story "A few days later, while reviewing her bank account, she noticed the check had bounced. Orr headed back to Albertsons to make good on her payment. But she was told the store had already placed her in collections."

While Albertson's certainly has the right to do this, it isn't my idea of good business practice. Why not at least make one attempt to contact the check writer? Have you contacted Albertson's and asked them why they are so quick to refer bad checks for collection?

gottaknow247
gottaknow247

I noticed that two.  The article also states that in order to open a case in Riverside County, Albertson's had to make at least one attempt to contact the check writer.  Either this lady isn't telling the whole truth or Albertson's didn't follow protocol. 

rozier.karen
rozier.karen

@gottaknow247"That's when I asked if I was actually talking to someone in the DA's office," she says. "And they said no, that they were a company being paid to represent the DA."

DA sold his letterhead to the highest bidder.

rozier.karen
rozier.karen

@gottaknow247 The issue is that creditors are turning to prosecutors to collect their debts in order to avoid having to go through the Fair Debt Collection Practices Act. Clearly the woman was at fault for writing a bad check. If Alberston's believed she committed a crime, they should have charged her with a crime. Instead, they used the long-arm-of-the-law to intimidate her into making good on her debt. That's skirting the intent of the Fair Debt Collection Practices Act. (I am not a lawyer so don't quote me on it.)

gottaknow247
gottaknow247

The issue I raise isn't the debt collection practices, but whether or not we are hearing the whole truth in the way Denise Grollmus tells us.  Did Albertson's try to contact Ms. Orr prior to Ms. Orr reviewing her bank statements or not?  Seems a little extreme on Albertson's part to send a $91 bad check writer to collections.  If Albertson's did try to contact Ms. Orr and those messages were ignored, then I don't see any problem with Albertson's actions.  I didn't read in the story if Ms. Grollmus tried to contact Albertson's for their side of the story.  I think it would be unfair to slander Albertson's based to the testimony of Ms. Orr alone.

 
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