Thousands of Sonoma County check bouncers who paid hefty fees to avoid court have been added to a lawsuit seeking refunds from the company that runs the county's bad check restitution program.
A federal judge in San Jose last week granted class-action status to a lawsuit against San Clemente-based American Corrective Counseling Services Inc. Since 2001, the company has operated the bad check restitution program at the Sonoma County District Attorney's Office. It operates similar programs all over the nation.
"Debt collectors, such as ACCS, cannot use their status as government contractors to strong-arm consumers," said Deepak Gupta, an attorney with the public interest group Public Citizen, which is handling the case.
The ruling means about 900,000 California residents who've received letters from the company since 1997 will become part of the lawsuit, unless they opt out. Of those, about 400,000 people paid the $120 fee to participate in the program, generating about $50 million in revenue for ACCS, according to Paul Arons, one of the attorneys on the case.
The goal of the suit is both to recover money for people who participated in program, but also to end its practice in California, Arons said.
"It's our position that the entire operation is illegal," said Arons, a Bay Area attorney who now lives in Washington.
Bad check restitution programs are allowed in California with certain restrictions as a way to help recover money for merchants who are the victims of bad checks and to reduce caseloads for district attorneys.
Supporters say the program raises money for prosecutors, gives offenders a way to avoid court and teaches people better money management skills.
But ACCS has found itself at the center of a legal battle over the way district attorneys partner with private companies to chase down -- some would say shake down -- people who owe money.
Critics say ACCS is little more than a debt collection agency "renting" the name of a district attorney's office to scare people and increase its collection rate. The letters strongly imply that people who receive the notices could be prosecuted if they do not enroll in the program and pay the $120 fee, Arons said.
The reality is that check-bouncing prosecutions are extremely rare, and no one in the D.A.'s office reviews the circumstances of each incident before the threatening letters go out, Arons said.
"After people read that letter, they are terrified," Arons said. "They are very concerned that if they don't do everything in the letter, they are going to have a problem with the D.A."
In March, Sonoma County District Attorney Stephan Passalacqua defended the partnership with ACCS, pointing out that more than 1,500 local merchants have taken advantage of the program, helping them recover nearly $1 million from about 4,000 people since 2001.
The DA's office has received $102,000 from ACCS since the program began, helping it offset the cost of several vital programs, he said.
At the time, Passalacqua said his office was considering ways to rewrite the letter to be "more sensitive." It was unclear yesterday if that has occurred. Passalacqua and ACCS officials did not return telephone calls seeking comment Monday.
The lawsuit seeks a refund of the $120 fee paid by each participant to ACCS for its one-day personal finance class. It does not request any of the restitution participants paid to merchants who received bad checks.