Lois Artz made an honest mistake.
The 72-year-old Petaluma resident wrote a check for $26.61 to buy a carton of cigarettes back in 2005, and it bounced.
Distracted by the burdens of caring for a daughter with breast cancer, Artz, a retired Bank of America manager who lives on a fixed income, said she simply didn't keep a close enough eye on her checking account balance.
"My daughter was so ill, my attention had been totally on her," Artz said. "I was going to make the deposit, but I completely forgot."
Artz soon received a letter from the Sonoma County District Attorney Bad Check Restitution Program. The letter informed her that she could avoid prosecution for her crime if she paid a fine and completed an education program. The cost: $196.62 -- more than seven times the amount of her bad check.
If she did not, the letter informed her, she could be prosecuted and sent to jail or prison for up to a year and face up to $1,000 in fines.
"It scared the living hell out of me," Artz said recently from the mobile home where she has lived for more than 25 years. "I've never done anything wrong in my life."
The official-looking letter did not come from Sonoma County District Attorney Stephan Passa-lacqua, even though it carried his name and was embossed with the seal of his office.
Instead, it was sent by a San Clemente firm that works with hundreds of county prosecutors to collect bad checks and divert people from the court system.
The company, American Corrective Counseling Services, is at the center of a legal battle over the way district attorneys across the nation have entered into partnerships with private companies to go after people who owe money.
Supporters say the company helps merchants recover debts, allows prosecutors to reduce costs, and gives offenders an alternative that keeps them out of the crowded court system.
But critics say ACCS intentionally blurs the lines between a company pursuing profits and government officials charged with protecting the public. It doesn't do enough to distinguish between people who make inadvertent mistakes and criminals who intentionally commit fraud, according to critics.
Artz is part of a nationwide class-action lawsuit accusing ACCS of shaking down innocent customers for excessive fees.
The company lost a key round last month when a federal appeal court rejected its claims that it acts as an arm of the government and therefore is immune from civil prosecution.
"As two appellate courts have recognized, they are not the government," said Paul Arons, one of the attorneys who sued ACCS. "The reality of the situation is they are a very, very profitable private enterprise collection agency renting the name of the district attorney in order to scare people into paying money they don't owe."
ACCS did not return a call for comment.
Arons claims the company has systematically defrauded hundreds of thousands of Californians who accidentally bounced checks, but were bullied into paying steep fines under a false threat of prosecution.
Not everyone who bounces a check has committed a crime. For that, prosecutors must demonstrate an intent to defraud the merchant. In most cases, people who have made honest errors quickly learn of the problem, make restitution to the merchant, and pay the bank's insufficient funds charge.