Washington Lawsuit Scrutinizes Use of Prosecutor's Seal on Debt Collection Letters

A federal class action lawsuit in Seattle alleges that a collection agency used the King County prosecutor’s seals on debt collection letters to consumers, while failing to disclose that the letter was from a collection agency and not a law enforcement office. The plaintiffs say they received seemingly official letters from Bounceback; the letters included threats of “criminal charges,” “criminal prosecution” and jail time if consumers didn’t pay the amount of the debt and more than $180 in fees.

It’s already clearly established under the Fair Debt Collection Practices Act that debt collectors can’t threaten consumers with fines, criminal prosecution or jail time if they don’t pay their debts. But in this specific case, Bounceback was able to use the county prosecutor’s seal on these collection letters because it participates in a “check enforcement program.” County prosecutors rented out the prosecutor’s seal and letterhead to Bounceback in exchange for a cut of the collection fees, the lawsuit alleges.

“Bounceback enters into contracts with prosecutors purportedly permitting it to operate in the prosecutor’s name, and it pays the prosecutor a fee for each successfully collected check,” the complaint states. “Prior to Bounceback initiating its collection activities, the local prosecutor neither conducts any investigation of a particular check writer, nor makes any individualized determination regarding either probable cause or the likelihood of prosecuting a check writer who does not pay the Bounceback fees and participate in the ‘Diversion Class.’”

This isn’t the first time Bounceback has been involved in a check enforcement program in the Pacific Northwest. The Missouri-based collection agency was being considered by the Multnomah County District Attorney’s Office in Oregon for its check enforcement program. But in June 2013, Oregon Governor John Kitzhabersigned into law SB 525, which ended the state’s check enforcement program, effective January 1, 2014.

Bounceback Inc., and its parent company Stone Fence Holdings, are not members of the collections industry trade group ACA International.

Privatized check enforcement programs were launched around the country in the late 1980s, but didn’t come to Washington until around 2000. Currently, approximately 300 prosecutors’ offices nationwide – nine of which are in Washington – take part in the program. In 2013, the Washington legislature tried to pass a bill prohibiting the practice in the state.