Debt Collectors And DAs Team Up To Scare Customers Who Bounce Checks

It used to be that retailers and district attorneys’ offices faced the same problem, but from different angles. People write an awful lot of bad checks. They might be trying to commit fraud, or they might have just forgotten to carry the one the last time they balanced their checkbook. Stores send the bad checks on to district attorneys’ offices if they think there might be fraud, and the DAs can end up overwhelmed with bad-check cases. They also hire collection agencies to recoup the money owed from their customers, but the rate of return on that isn’t so great. The not-so-obvious solution, which 300 district attorneys take part in: lend their names and letterhead to collection agencies, who in turn threaten check-bouncers with prosecution and prison.

Yes, let’s get the question out of the way: “People still write checks?” They do. And as recently as 2009, people wrote $127 billion worth of bad checks. People wrote a lot more checks in general back in the late ’80s when the first debt collector/DA partnerships began. DAs tell the New York Times that the scary letters only go out once customers have already ignored a few requests for payment. They typically include the amount of the original check, and fees that include tuition to mandatory “financial accountability” courses. The customer’s local district attorney gets a cut of those fees.

In Prosecutors, Debt Collectors Find a Partner [New York Times] (Thanks to everyone who sent this in!)

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  1. Blueskylaw says:

    “The not-so-obvious solution, which 300 district attorneys take
    part in: lend their names and letterhead to collection agencies”

    And by lend, do you mean the collection agencies “pay” the district
    attorneys for the right to “borrow” their name and sterling reputations?

    • Tim says:

      Yes. The DA gets a portion of the fee for a class the accused must attend in order to avoid “possible” prosecution.

  2. Scrutinizer says:

    Will the day DA’s be liable for unfair claim practices, especially under color of their office.

    • euph_22 says:

      Knowingly writing a bad check is a FELONY. This isn’t the DA abusing their authority, it’s capitalizing on their authority to resolve criminal matters without costly and unnecessary prosecutions.

      • chatterboxwriter says:

        It’s not always a felony. In my state, it is not a felony unless the check is for $75,000 or more. Bounced checks of less than $200 are summary offenses. Anything between $200 and $74,999 is a misdemeanor, with the amount of the check determining if it’s a first, second, or third-degree offense. Additionally, intent also plays a big part in prosecution for bad checks. The person has to have known at the time s/he wrote the check that it would not be honored, whether they wrote a check on a closed account or they did not have any funds in the account within the 30 days prior to writing the check. If someone accidentally bounces a check, it only becomes a criminal offense once they are notified about it and do not pay the amount within 10 days of receiving notice of insufficient funds.

      • SirWired says:

        Knowingly writing a bad check is indeed a crime (if not necessarily a felony.) However, these letters are simply sent by collection agencies without any review by the DA’s office first. Nobody has actually done any investigation whatsoever to determine if a crime took place. The only thing that is known is that a Civil Tort took place… a crime is a different matter altogether, and requires a lot more than the mere existence of a bad check.

        And the letters are written as if prosecution is a sure thing, and that signing up for the “financial responsibility” course (in addition to making good on the debt) is the only way to avoid it. This simply isn’t true. While of course the writer of the check should make good on it, prosecution ISN’T inevitable, nor would a conviction be inevitable, even if it were prosecuted.

      • raincntry says:

        No, it’s not. It can be a felony depending on the amount of the check but the mens rea portion of the crime, knowingly, requires that the person know at the time the check is written that they do not have sufficient funds to cover the check.

        This scheme bypasses the fact that some people do have a real defense to this charge and as the article points out, they are never told, only threatened with prison if they don’t pay AND attend this scam of a class.

        The DA’s have outsourced the practice of law and are abusing their prosecutorial discretion in these cases. They are also endorsing the practice of law without a license by letting debt collectors use their letterhead without their office even giving a cursory review of these cases.

  3. Charles Edward Winthrop III, Esquire, Investigator of the Unknown Music says:

    Reminds me of a small town where I lived through the late 80’s. The DA there OWNED a collection agency. No conflict of interest there, right?

  4. triana says:

    Yeah, but do people actually write GOOD checks? Besides Grandma not being cool with those newfangled ATM cards and the one check I have to mail to my landlord because he’s an independent property owner, I can’ t think of any reason to write a check in 2012 other than not actually having any money in your account.

    • AtlantaCPA says:

      That’s what I’m wondering. If you take out rent checks, what percentage of checks are actually good? Considering the total is $127 billion, even a bad check rate of a few percent would be a lot of money.

      • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

        I write checks to my feedmill if I don’t have enough cash on hand for birdseed. They take credit cards, but I don’t want them to pay the merchant fee.

    • AzCatz07 says:

      I write a check to my hairdresser every week. She can take credit cards, but I know it costs her money to do so, and I never carry cash. So she gets a check. I can’t think of any other checks I regularly write out.

      • Pre-Existing Condition says:

        Same thing here…

        Property taxes, personal property taxes, city taxes, child care, medical expenses, and occasionally payments to small businesses that don’t take credit cards. Checks are still handy for organizations that don’t take credit cards (taxes), when a redundant paper trail is needed, or when drawing from a tax exempt account.

    • Sad Sam says:

      I write quite a few checks over the month. Gifts to my niece and nephew, to my utility company, to pay property insurance, to pay taxes, anything where I need a record for the IRS, charitable giving, etc.

  5. lyontaymer30 says:

    I only write checks if it’s absolutely the only option or if I trying to keep track of that particular payment. I had to pay a medical bill where the company had no other options but to mail a check.

  6. mbd says:

    Writing a bad check, whether knowingly or not, is a crime that can be prosecuted, and if convicted the writer can go to jail.

    It is better not tell the collection agency to go jump than to write a bad check, and Never, Never, Never post date a check or you could find yourself in this position.

    I have no love for collection agencies, but in this case they are correct. Passing a bad check is a crime. Refusing to pay them is not a crime.

    • SirWired says:

      You are not correct. Passing a bad check is only a criminal offense if there is “an intent to defraud.” An innocent mistake is not a crime.

      • euph_22 says:

        If the check writer knows there is insufficient funds when he writes the check, that is intent to defraud. And people should reasonably be expected to know what is in their check account along with any outstanding debts.

        So under this interpretation of the crime, almost all bounced checks have fraudulent intent. There are basically no prosecution under this interpretation (or any interpretation for that matter), because the businesses would rather get paid + a fine, and don’t care if the check writer goes to prison.

        However, post dating a check is legal. Moreover, if a posted dated check is cashed early on an NSF account, it generally does not fall under the Bad Check laws. Because a check is defined legally as an instrument available for immediate payout. Since a posted check is NOT available for immediate payout, it is not a check in the eyes of the law (until that appropriate date).

        • SirWired says:

          I know that writing a check when you know you don’t have the money is illegal. I was referring to the OP’s assertion that is was a crime whether or not you know you have the money. It isn’t.

          And there are plenty of circumstances where one might not know the exact amount of the available balance and mistakenly write a bad check. Examples: Unanticipated fees, fraudulent or mistaken ACH, late-clearing checks, somebody else writing you a bad check, etc.

        • raincntry says:

          Incorrect analysis. You assume far too much when you claim “people should reasonably be expected to know what is in their check account along with any outstanding debts.”

      • IanMoone says:

        Depends on your state. In TX, the intent to defraud is assumed under the law if the check writer fails to make good on the check within 10 days voluntarily…there is no obligation by the merchant to contact the check writer, etc.

        The only exception is if you are paying on an open account – the law was written for goods and services. The crime is called “THEFT BY CHECK” because you’ve basically stolen something by writing a bad check.

        Again, every state is different. TX usually has a small division of the DA to handle bad checks and they take it seriously. Probably because TX forbids private wage garnishment.

    • raincntry says:

      You are simply wrong.

    • Tim says:

      That’s not the issue here. The issue is that prosecutors are letting debt collectors use their name, letterhead and signature to threaten these people with prosecution in an attempt to collect the debt. In return, the prosecutors are getting a cut of the fees collected.

    • Robert Nagel says:

      Isn’t a post dated check considered an IOU?

  7. SirWired says:

    I like the closer of the article, where one of the people that got hit with the letter asked:

    If they really think I’m a criminal, why do they want me to take a financial responsibility course? What good would that do?

    It’s a good question. Either:

    A) You have fraudulent intent, in which case you are a criminal that doesn’t care how much is or is not in your account.

    Or:

    B) You do not have fraudulent intent, and therefore have committed no crime, and therefore are not subject to the jurisdiction of the DA’s office.

  8. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    There’s a big difference between writing a check, and because your bank screws around with debits and credits, the check bounces, and then you make it good – AND pay fees to both the bank and store, and the person who writes a check, knowing there’s no money, and then never makes the check good. Many businesses will give you a chance to make it good without jumping directly to the DA’s office and collection agencies.**

    **based on the people reported in my local newspaper who have been arrested for this, nearly every articles says they didn’t make the check good within so many days.

  9. alternety says:

    There may be a resurgence in check writing. The credit card companies have decided that retailers may now charge a fee for credit card use. So now we have prices which generally are priced assuming a credit card is used, having the fee added again if we use a card.

    Now it will be clearly visible to those who just did not understand the impact cards had on pricing before.

  10. Tim says:

    This is pretty despicable, and I honestly can’t believe it’s legal.

  11. chiieddy says:

    I write a monthly check to my tae kwon do studio. Small business and she doesn’t take card.
    I also write a check whenever I have work done on my home. I pay ‘in cash’ but a check affords me extra protection [stop payment]. The workers prefer the cash and I prefer the security.

  12. mcgyver210 says:

    Sounds like a Major Conflict of Interest IMO when Public funded DAs partner with Scum Bag Private Debt Collectors with many having a well deserved reputation for crossing the line in collecting a legitimate or non-legitimate debt.

    Disclaimer: Being a Business Owner I hate Fraud but I also Hate with every part of my being Debt Collectors.