Six Massachusetts district attorneys, who announced in February that they had discontinued the use of unlicensed debt collectors to extract money from bad-check writers, did not completely shut down the controversial programs for up to three more months.
Up until May, most of the alleged bad-check writers already in the system continued to be dunned by private debt-collection companies using mock stationery carrying the signatures and official seals of the district attorneys. In January, the state banking commissioner, David Cotney, had said in a meeting with most of the district attorneys that the companies they had hired were improperly operating without a license and that their practices did not comply with the Massachusetts Consumer Protection Act, according to the district attorneys.
When the Globe asked the six district attorneys why they continued to process cases in the face of their illegality, only two addressed why the practice continued so long.
“The program was formally terminated in May 2013, pursuant to the procedures detailed in the contractual agreement between the parties,” said Gerald Stewart, a top aide to Suffolk District Attorney Daniel Conley. Stewart was referring to a provision that requires a 90-day notice of termination.
Cynthia Pepyne, a spokeswoman for David Sullivan, the Northwestern district attorney, believes the extra time was a good idea. “Wrap-up time was beneficial to the district attorney as it allowed for at least partial resolution of cases where probable cause for prosecution was established,” she said.
But consumer advocates questioned how the prosecutors could allow the companies — Corrective Solutions and BounceBack — to continue operating on their behalf when their activities had been deemed illegal.
“Once advised that the companies were violating the law, the district attorneys were obligated to shut down the entire program, and that includes existing cases,” said Paul Arons, a lawyer who has brought class actions against Corrective Solutions. “Nothing in the law provides an illegal business a tapering-off period.”
Roger Bertling, of the Harvard Legal Services Center, added, “It is truly unfortunate that the district attorneys didn’t immediately shut the whole thing down and stop the collectors from fleecing the public, who the DAs are bound to protect.”
Told of the critics’ comments, Michael O’Keefe, president of the state district attorneys association, said simply: “Tell them to call me.”
In addition to Conley, Sullivan, and O’Keefe, who is the district attorney for the Cape and Islands, the other district attorneys who had contracts with Corrective Solutions or BounceBack were Gerard Leone, then of Middlesex; Michael Morrissey of Norfolk; and C. Samuel Sutter of Bristol. Morrissey’s and Sutter’s offices did not respond to e-mails seeking comment, while the Middlesex district attorney’s office issued a statement saying that the contract had been terminated and “therefore, we will not comment further.”
Besides being unlicensed, critics also asserted that Corrective Solutions and BounceBack engaged in other debt-collection practices that ran afoul of many other state and federal debt-collection laws.
The district attorneys defended their the bad-check program, saying they allowed them to assign resources to violent crimes, while saving taxpayers money by diverting cases out of the criminal justice system.
Although the district attorneys terminated the bad-check programs, they have not given up on them. They are pushing for the passage of legislation that would authorize the same programs they stopped. A bill filed by Senator James Timilty, a Walpole Democrat, would exempt the private debt-collection companies from having to be licensed, contrary to what is required of other debt collectors, and from having to comply with state law banning unfair and deceptive debt-collection practices.
If the bill passes, Corrective Solutions and BounceBack would be allowed to jump back into business with the district attorneys using the same tactics as before. These tactics, which were the subject of a Globe story in April that followed a four-month investigation, included masquerading as the district attorneys by using mock district attorney stationery in their mailings and threatening the check-writers with being jailed for up to five years if they failed to make good on the checks.
The letters demanded that the recipients take a pricey “financial responsibility” class as well as pay a variety of other fees. All told, this frequently increased the total owed to two to three times the amount of the original bounced check.
One woman, who contacted Greater Boston Legal Services after reading the Globe article, said she bounced a check for about $250, but wound up having to pay Corrective Solutions about $700, according to Nadine Cohen, a consumer attorney with the agency, which provides free legal services to low-income individuals. “Immediately after she wrote the check, she got laid off from her job,” Cohen said. “After she got laid off, she had to pay her rent. There was just not enough money in the account.”
The woman had no idea that the menacing letter was not from the district attorney, but from a debt-collection company, according to Cohen, who emphasized that when the woman wrote the check, she never intended to write it for more money than she had in her account. In Massachusetts, as in many other states, if a person writes a bad check, it is only a criminal act if he or she intended to do so
The state legislation that the district attorneys have had introduced closely tracks an exemption in the federal debt collection law for the companies they hire. (Corrective Solutions spent over $660,000 lobbying for the federal exemption, as reported by ProPublica.)
The National Consumer Law Center in Boston strongly opposes the legislation. “The bill legitimizes a predatory collection practice that victimizes consumers who often have inadvertently bounced a check because they were living paycheck to paycheck, and then lost their job or got hit with things like unexpected medical bills or bank fees,” said Charles Delbaum, a class-action lawyer with the center.
Cotney, the banking commissioner, declined to comment on the legislation, even though it would exempt the companies from the state debt-collection law that he oversees. Timilty, the senator who introduced the legislation on behalf of the district attorneys, did not respond to repeated requests for an interview.
Even if legislation were to pass, Cohen said, the practice simply is not fair.
“I don’t think the district attorneys should be enriching private debt-collection companies that are really using unfair and deceptive practices to get people’s money,” she said.
Colman M. Herman can be reached at firstname.lastname@example.org.