Class Action Lawsuit Filed over Bad Check Collection Practices

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A class action lawsuit was filed last against the collections company Bounceback Inc., its parent company Stone Fence Holdings and director Gail Krieg, alleging they violated the Fair Debt Collection Act and Consumer Protection Act by “renting” district attorneys’ seals and letterhead to threaten consumers with jail time over unpaid checks.

Bounceback is a high-volume debt collection agency that solicits business from large national merchants and retailers. The retailers and merchants provide Bounceback with information about unpaid checks, and Bounceback sends out standardized collection letters to the consumers. Unlike most debt collection services, district attorneys rent out the county prosecutor’s seal and letterhead in exchange for a portion of the collection fees under a “sham criminal diversion program,” the class action lawsuit says.

Lead plaintiffs Wodena Cavnar, Rosaline Terrill and Linda Parks filed the debt collection lawsuit, claiming Bounceback uses the seals and letterhead from county prosecutors to mail threatening letters to consumers with criminal prosecution if they fail to pay for allegedly bounced checks and more than $180 in fees.

The bad check collection class action lawsuit also alleges Bounceback failed to indicate the letter was from a debt collection agency and not from the district attorney’s office. These debt collection letters reportedly contain a toll-free number that appears to reach the district attorney’s office, but actually connects to Bounceback.

Consumers who receive the collections letters from Bounceback are led to believe that they were sent by the county prosecutor’s office, not by a debt collection agency. The Bounceback class action lawsuit alleges the prosecutors have “no meaningful control” over Bounceback’s debt collection efforts. Further, the plaintiffs allege that prosecutors have not investigated whether there was criminal intent behind the unpaid check or whether the unpaid check was an “innocent mistake.”

The plaintiffs seek certification of the bad check collection class action lawsuit as well as the return of all unlawfully collected fees. They are also seeking statutory damages for violations of the Consumer Protection Act.

Washington law allows companies to contract with county prosecutors in exchange for a portion of the collection fees. However, the class action lawsuit accuses Bounceback of making numerous misrepresentations in violation of federal and state laws.

Bounceback is not the first collector to be accused of improperly utilizing letterhead and seals from District Attorneys. A class action settlement was reached in a similar case against American Corrective Counseling Services and National Corrective Group, resolving a class action lawsuit alleging they illegally collected fees when carrying out bad check diversion programs in the names of district attorneys.

The plaintiffs are represented by Erika L. Nusser of Terrell Marshall Daudt & Willie.

The Bounceback Bad Check Class Action Lawsuit is Wodena Cavnar, et al. v. Bounceback Inc., et al., Case No. 2:14-cv-00235, in the U.S. District Court for the Eastern District of Washington.

UPDATE: The Bounceback Bad Check Class Action Settlement is now open! Click here for more details!