Checkmate

Prosecutors team with debt collectors to terrorize consumers in ways both highly profitable and usually illegal.

Checkmate
Brian Stauffer

Julie Orr has plenty of reasons to bounce a check.

In just a few years, she's gone from running a successful advertising business to being a single mom on disability. Hers is a dilemma of American life: A leg injury keeps her from working, but she can't afford the surgery without health insurance.

Yet Orr says her woes didn't lead her to write a bum check at the grocery store. "Sure, we've fallen on tough times," says the 54-year-old from Riverside, California. "But I've never bounced a check before in my life. I've always been on top of my finances."

Julie Orr bounced a $91 check at a grocery store, but was hounded for more than $300 by a private collections agency.
Rodrigo Pena
Julie Orr bounced a $91 check at a grocery store, but was hounded for more than $300 by a private collections agency.
Adam Levin, former consumer affairs commissioner of New Jersey and owner of Credit.com.
Adam Levin, former consumer affairs commissioner of New Jersey and owner of Credit.com.

Accidentally overdrawing one's bank account isn't a crime. It is, however, a hyper-lucrative business, allowing banks to collect $30 billion a year in overdraft fees while their customers frantically swim back to the surface. Such is the bounty of faulty math.

So Orr was shocked when she received a letter from the Riverside District Attorney's Office accusing her of fraud.

In May, she wrote a check for $91 at an Albertson's grocery store. A few days later, while reviewing her bank account, she noticed that the check had bounced. Orr headed back to Albertson's to make good on her payment. But she was told that the store had already placed her in collections. It was out of the grocer's hands.

A month later, Orr received a letter from the district attorney's office. It inexplicably accused her of intent to commit fraud, noting that she was now eligible for "up to one year in the county jail." The only way to avoid criminal charges: participate in the county's "voluntary" bad-check restitution program.

"The letter really made me think I'd go to jail if I didn't," she says.

But the DA wanted more than Albertson's $91 back. Though California law restricts the penalty on bad checks to $25, the letter demanded $333.51, which included $175 for a "voluntary" financial-accountability class she'd have to take.

Orr didn't even consider arguing her innocence. She just wanted the problem solved. So she called the 1-800 number on the letter to make arrangements to pay in cash at the sheriff's department. When she was told she could only send a check to a P.O. box, Orr grew suspicious.

"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."

In fact, Orr had contacted Corrective Solutions, a private company from San Clemente. According to its website, it handles bad-check cases for 140 district attorneys nationwide — jurisdictions that oversee 65 million people, from Colorado to Florida, Michigan to Washington.

Consider it the privatizing of justice. Instead of investigating bad-check complaints, prosecutors simply pass them along to Corrective Solutions. The company then uses official DA letterhead to threaten jail time if consumers don't pay up. Corrective Solutions also runs the "voluntary" financial-accountability classes, and prosecutors get a cut of the profits while barely lifting a finger.

Unfortunately, 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.

Orr emailed Corrective Solutions, saying she'd be happy to repay the $91 plus a $50 fee. But she wanted to skip the "voluntary" class. She simply couldn't afford it.

Corrective Solutions didn't respond — but the threatening letters kept coming.

"When no one wrote me back, I'd had it," Orr says. "I'd tried everything, even calling the district attorney's office directly. No one could help me. I just don't see how this is right, or even legal."


Immunity From Deception

Debtors' prisons were outlawed in 1833, when America decided it was counter-productive — and a waste of time and money — to imprison people for being broke. Despite myth to the contrary, most people avoid their bills simply because they can't pay them, not because they're on the make.

"There was a [federal] study done in 1974 about why people didn't pay their debts," says Bob Hobbs, deputy director of the National Consumer Law Center. "And the number of people who could but didn't pay their debts was .4 percent. ... The most typical reasons were they lost their jobs, got divorced. Some overspent, but were encouraged to. Others got cheated, and so on and so forth. Some people had even died. It's not right, but it's life. And it's the cost of doing business."

So Congress passed the Fair Debt Collection Practices Act in 1978, barring collections agencies from threatening jail time and deceiving consumers.

"We have members that collect on behalf of the government, from federal student loans to meter fines," says Mark Schiffman of the Association of Credit and Collection Professionals, the industry's largest trade association. "We can't put the logo of a government agency on our letterhead. We can't say we're from the Department of Education. We have to say that we're 'ABC,' a company working on behalf of the Department of Education."

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

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6 comments
scottindallas
scottindallas topcommenter

So, Is Unfair Park dead?  Maybe it's my browser, but this thing seems all screwy.  


Anyway, this goes to my point about utilities, they are distinct markets from free markets, and privateering in them can be quite pernicious.  Gov't need to do what it do, and stay out of truly free markets, and concern itself only with crimes against people. 

elizabethcmorgan
elizabethcmorgan

If you think this is bad, you should talk to individuals in Texas who've been convicted of a minor drug offense, a DWI, or DUI. Ankle monitor companies, Interlock devices, specialty courts, special counseling groups, none of it optional. Refusal means the offender goes to jail. It is a big money business for both private enterprise and city-county-state government (you KNOW they are making a little money somewhere or they wouldn't hook up with these scheisters). Some offenders are on the hook to the county or the state for thousands of dollars every month--no wonder recidivism is so high. And if you fail to keep up this high debt, probation is revoked and you go to a privatized prison where there is no motivation to get you out and back into society. You're worth more to the state of Texas as a prisoner than a tax-paying citizen! It is a national disgrace! If people only knew the stories of these poor souls who had one lapse in judgement and the consequences and repercussions are enormous.

julipo
julipo

How insane is it that our so-called representatives allow this to go on? They should burn this whole sham industry to the ground. The companies who push those red-light cameras have the same agenda. They can talk about public safety all they want, but everyone knows it's all about the Benjamins.

dfwenigma
dfwenigma

It's time to hold our district attorney's responsible for their actions. This type of behavior should be unconscionable but it's not. It's perfectly legal and acceptable. Everyone's on the take here. Let me be more frank - even if they're not taking payoffs from the debt collection industry their election campaigns take contributions - whether straw or direct - and these can then, in some cases, be cash in the pocket of the elected official. Shame on them.

kergo1spaceship
kergo1spaceship

the only two Orr's I care about is Ben Orr, the great, departed bassist of The Cars, and the GREAT Bobby Orr-#4, the man who scored 146 points, AS A DEFENSEMEN. The best two way player ever!

TheCredibleHulk
TheCredibleHulk topcommenter

Interesting article.


I think I'll go check my checking acct. balance...

 
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