The Consumer Financial Protection Bureau recently sued Bounce Back, Inc., a Kansas City, MO back check processor for alleged violations of the FDCPA and CFPA for deceptive, false, and misleading practices in connection with the collection of debt.
Bounce Back is the national operator of the bad check recovery program of 90 district attorneys across the US. Bounce Back runs the pre-trial diversion program. I assume this is the workforce that actually notifies check writers, collects payment, and- when necessary- refers the cases to the DA for action, which may or may not include prosecution.
This case sheds light on a subtle but important distinction in the check-writing cases. The check-writing “prosecution” is merely a collection effort until you are actually prosecuted. This is true even though the communication looks and sounds official. Nevertheless, operators like Bounce Back are excluded from the FDCPA’s definition of “debt collector’ and its proscriptions. That is, so long as they do not otherwise traverse statutory requirements set out in the FDCPA.
Bounce Back is accused of using DA letterhead to send letters to 19,000 check writers threatening, among other things that check writers could avoid prosecution if they paid the dishonored check and certain administrative fees and completed a financial education course. The FDCPA explicitly precludes collectors from communications that suggest such communication is from a state agency.
Bounce Back never communicated with the DA about the check prior to its mailing. Many of the dishonored checks come directly from Merchants, who report them to Bounce Back’s affiliate Check Connection. This, in turn, precludes a finding of probable cause, a predicate to validate threats of prosecution. Bounce Back failed to give a mini-Miranda and other required disclosures.
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The complaint is here.