Have you bounced a check?
The Senate Banking Committee’s version of H.R. 3505 amends the Act to excuse some bad check enforcement programs currently under state regulatory oversight from federal regulatory oversight. Here is how it works –- Some state and local prosecutors use companies called “check-diversion” companies to help them collect on and reduce the number of bounced checks. If someone bounces a check they are sent a letter, often on the official letter-head of the prosecutor, telling them they must attend a check-restitution program, a fancy name for financial responsibility counseling program, operated by prosecutors in their local areas. They are also told they owe fees several times the amount of the bounced check, and if they don’t comply with the instructions they will be prosecuted. Prosecuted — For making a mistake?
No, we don’t think that people who write bad checks shouldn’t have to pay. But we also don’t agree that criminal prosecution is appropriate in most cases. This amendment as written, allows check-diversion companies to operate outside the Act because check-diversion companies and their activities will not fall under the statutory definition of ‘debt collection.’ Because of this exemption, check-diversion companies will be allowed, to use the punitive power of the local prosecutor’s office to:
• Force consumers to pay for checks that they may not even owe;
• Force consumers to pay exorbitant fees that are not authorized under state law;
• Subject consumers to threats of criminal prosecution for not paying for the checks.
Since check-diversion company activities are not considered to be ‘debt collection’ consumers will lose the rights granted in the FDCPA, for dealing with debt-collectors such as:
• The right to request copies of the checks;
• The right to dispute incorrect information prior to being subjected to the harassment of the check-diversion companies;
• The right to avail themselves of the protections against unfair, abusive or deceptive collection practices now prohibited by the Act.
This provision places no practical limits on the activities of check-diversion companies, which have a track record of abusing consumer rights throughout the country. Nationwide consumer organizations and the Federal Trade Commission oppose this unjustifiable exemption of check-diversion companies, and we do too. If they walk like a duck, and quack like a duck . . . well you know the rest – they must be debt collectors.
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