How Debt Collectors Get Away With Terrorizing Consumers -- With the Blessing of Public Officials

"We do get people who made a mistake, but a good majority of the students who take our class say that they just procrastinated and didn't intend to pay until they saw the mail from the DA's office," Alvarez says.

Again, internal records dispel any notion of rampant criminality. In 2011, Correction Solutions sent out 33,202 letters on behalf of L.A. County. Fewer than 1 percent of those cases were actually recommended for prosecution.

PHOTO BY RODRIGO PENA

Julie Orr

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More About

• Julie Orr
• Carole Hirth
• Paul Arons
• Crime and Law
• Criminal Sentencing and Punishment

"They've prosecuted more glue sniffers than bad-check writers in a lot of these counties," consumer-rights attorney Arons says. "This is not an overwhelming problem. The feds keep stats on this, and only one in every 200 checks doesn't clear. And of those, about half clear on redeposit, so we're talking about 0.5 percent of all checks written."

It's hard to fault prosecutors for ridding themselves of a nuisance. Fraud charges require investigations, and most prosecutors have nowhere near the manpower to handle them, admits Scott Burns, executive director of the National District Attorneys Association.

"The real issue is that prosecutors' offices are, almost across the board, underfunded, while suffering hiring freezes and, in some offices, up to 30 percent cuts in personnel," he says. "The only logical thing is to prioritize those cases and those issues that are the most important."

But by ridding themselves of a headache, they're creating a new one for consumers, who are presumed guilty without investigation or chance of appeal.

That's the basic sentiment of Ed Griffith, spokesman for the Miami-Dade Office of the State Attorney. He believes that if a check writer ignores contact by a merchant, that's proof enough of a crime. "Your failure to make good on that check is an issue of intent. The opportunity to make good and not take advantage of that opportunity speaks to your attitude."

Griffith argues that even innocent mistakes merit sentencing to a financial-accountability class. "Even if someone says that their child overdrew their account, we believe putting them in a diversion program is the right move."

Yet some believe the classes are just a ruse to generate fees. "Their financial-responsibility class is nothing more than learning how to balance a checkbook," says Levin, New Jersey's former consumer affairs commissioner. "It's garbage. If people aren't passing a bad check with intent, they shouldn't be going to a class. And if they are, they shouldn't be going to a class; they should be going to jail. Don't tax overburdened consumers with a course that is effectively worthless."

The ACLU's Dansky agrees. "There are far better ways of dealing with the problem. If the cases are truly baseless, then the prosecutors shouldn't be involved, period. Merchants can use debt collectors directly without getting prosecutors involved."

Joseph Ridout has a hard time believing that so many scam artists have chosen careers in bad checks.

"We believe that very few of the recipients of these letters intended to defraud the merchant," says Ridout, who works for Consumer Action, a San Francisco nonprofit. "It's just people who overdrew their checking accounts with a check. The curious thing is that it's a moment in time when banks have destigmatized overdrawing your account with a debit card. What's the difference?"

In fact, it was banker scheming that landed Carole Hirth in trouble last year. More than a dozen major banks have paid multimillion-dollar fines for reordering purchases and delaying deposits solely in order to generate overdraft fees. In Hirth's case, PNC was holding her direct deposits until it withdrew her outgoing charges — effectively overdrafting her account so it could charge extra fees.

She knew none of this at the time she wrote a $393.86 check to Dominick's, a Chicago grocery story. The 59-year-old was in the hospital being treated for Crohn's disease when the check bounced. For some reason, the store never tried to redeposit it, which most merchants do. If it had, Hirth says, the check would have cleared. Instead, the Safeway-owned chain sent her a letter.

"I had been back from the hospital for just four days when I checked the mail and thought, 'Oh, my God,' " she says.

Hirth went straight to Dominick's, wrote a new check and paid a $35 bounce fee. She considered the problem fixed.

But four months later, she received a letter from the Cook County state's attorney. It said that she'd been accused of deceptive practices and that she faced up to a year in jail and a $2,500 fine. The only way to avoid this fate was to pay $649.86, which included penalties and a diversion course.

"I already paid them," Hirth says. "I contacted [the grocery store's] ethics department and said this was just wrong. I spend enough money there. I told them they should work with me. I told them to look up my Safeway card. I've been shopping with them for the past 30 years!"

Safeway said there was nothing it could do. She'd have to contact the state attorney's office.

Hirth called the toll-free number on the letter but got nowhere.

"They accused me of committing a fraudulent act. They said that if I don't pay everything and take their class, I could be arrested and end up in jail. He was very, very mean," she says. "I told him that I didn't understand how that could happen. I said I'd already handled it, it should be cleared up, but he just went on and on and on."