The Consumer Financial Protection Bureau yesterday announced it had filed a lawsuit against a debt collector, accusing it of violating the Fair Debt Collection Practices Act and Consumer Financial Protection Act by sending collection letters using the letterheads of its clients — district attorneys’ offices — to collect on outstanding debts without identifying itself or that the letter is coming from a debt collector.
A copy of the complaint, filed in the District Court for the Western District of Missouri, can be accessed by clicking here.
The collector, BounceBack, Inc., operates a bad check pre-trial diversion program for more than 90 DA’s offices across the country. BounceBack sends collection notices to the individuals, seeking to collect on the unpaid debt and enroll the individuals in a financial education course. The letters are sent on the letterheads of the DA’s offices, informing the individuals that they could face criminal prosecution unless they pay the amount of the dishonored check, pay certain administrative fees, and take the financial education course.
The problem is that BounceBack does not identify itself to the individuals in the letters and the letters do not say that they are coming from a debt collector, according to the complaint. And, in most cases, the DA’s offices do not follow through on the threat to prosecute individuals who do not pay back the amount that is owed.
BounceBack is accused of sending more than 19,000 letters to individuals dating back to 2015.
The CFPB accused the collector of violating Section 1692e(4) and 1692e(5) of the FDCPA by falsely representing that nonpayment would result in criminal prosecution, Section 1692e(9) by distributing written communications that falsely represented to be issued by a state official or agency, Section 1692e(10) by making false representations and using deceptive means to collect a debt, Section 1692e(11) by failing to reveal that it was a debt collector, and Section 1692g(a) by failing to include required dispute notices. It was also accused of violating the CFPA by making deceptive representations that failure to pay the alleged debt and enroll in the financial education course would result in prosecution, and that the notices were coming from a district attorney.