CorrectiveSolutions' Checkmate

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

"The litigation has been hard," says Bob Hobbs, deputy director of the National Consumer Law Center. "Either these companies declare bankruptcy, or they just drag these things on forever, and no one gets paid."

*     *     *

As the case languishes in court, advocates hope Congress will finally close the 2006 loophole.

They received a glimmer of hope in October, when President Barack Obama's new Consumer Financial Protection Bureau announced it would be overseeing debt collectors, starting this year. For the first time in history, the feds will require those making more than $10 million per year to supply regular reports to ensure they're not deceiving and threatening consumers.

Still, Moira Vahey, an agency spokeswoman, declined to comment on how it would deal with the bad-check programs.

For now, the only oversight comes from those making money on the deals: the district attorneys themselves. And they show little interest in policing the industry.

Take the Minnesota company once known as Financial Crimes Services. In 2009, it was sued for violating the Fair Debt Collection Practices Act. The company agreed to pay $75,000 in penalties and court costs.

Last year, it changed its name to Check Diversion Program, and it's still operating throughout Minnesota and Wisconsin. "We're not a debt-collection company, but a diversion program," says CEO Scott Adkisson. "We send out approved letters. And it's the DA's decision who gets them, not ours. We just manage the program."

The evidence suggests otherwise. In Minnesota's Goodhue County, the program is run by the Red Wing Police Department, which referred inquiries back to Adkisson. Minnesota Attorney General Lori Swanson would not respond to interview requests, either.

Levin believes this lack of oversight may be the key to dismantling the programs: If prosecutors aren't reviewing the cases, collection agencies aren't legally eligible for immunity.

In the meantime, victims such as Orr, Schwarm and Hirth have little recourse but to hire lawyers, paying thousands to defend themselves for bouncing $50 checks at the grocery store.

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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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