Legal Featured Article
September 18, 2012
Debt Collection Companies Using District Attorneys' Letterheads To Threaten Check Writers
By Arvind Arora, TMCnet Contributor
Though the job of debt collection companies has never been easy, most of the times they tend to go for a quick method to extract money out of the customers’ pockets by using means which are not considered to be appropriate.
A large number of prosecutors have reportedly been allowing companies to use their letterhead and stamp while contacting the check writers, against a fee. The debt collection companies have been sending these letters equipped with the original seal and signature of the local district attorney’s office, which give the check writers an impression that if they don’t comply with the guidelines written in the letter, they might be jailed.
In the bargain, in addition to the unpaid checks, these debt collection companies also charge the debtors with high fees for special classes on budgeting and financial responsibility, and a part of the amount also goes back to the district attorneys’ offices.
During recent years, debt collectors have earned a bad name for themselves by illegally threatening people to get them jailed if they don’t pay their dues. In the new phenomenon, though, it has been found that the ultimatum comes with the imprimatur of law enforcement itself, and that too when the commitment of any crime has yet not been established.
Prosecutors have been claiming that these kinds of alliances enable them to concentrate upon crimes of more importance, as these letters with their letterheads are sent only to the check writers who fail to make the payments to merchants. A small part of the overall fees collected is shared with the district attorneys as well. In the recent years, this practice has become prevalent in over 300 district attorneys’ offices.
“The companies are returning thousands of dollars to merchants that are not coming at taxpayer expense” said Ken Ryken, deputy district attorney with Alameda County.
Debt collection companies using these letterheads are being challenged by consumer lawyers in various courts across the nation, on the grounds that they don’t have the authority to threaten prosecution or to ask for fees for classes when no district attorney has reviewed the facts of the cases. According to these lawyers, the district attorneys are in a way offering their valuable stationary on rent, which has been empowering the debt collection companies to give a wrong impression that they might be legally punished if they fail to respond to the notice.
“This is guilty until proven innocent,” commented Paul Arons, a consumer lawyer in Friday Harbor, Wash., about two hours north of Seattle.
In August 2012, Vertex (News - Alert) Business Services announced to partner with Metropolitan Sewer District or ‘MSD,’ based in St. Louis, Missouri, to implement a new debt collection strategy applying advanced analytics to collect more outstanding debt from MSD customers. Overall, the total year-one projected value of the Vertex debt collection program implementation for MSD is estimated to be $1,412,771.
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Edited by Allison Boccamazzo
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