It’s one thing for the officialdom to sit back and allow financial services industry chicanery to go un or inadequately punished, quite another to get in bed with them to perpetrate a scam.
The New York Times reports on how over 300 local district attorneys are participating in and profiting from what amounts to a shakedown operation. Let’s say you’ve bounced a check. The debt collectors send letters using the local district attorney’s letterhead, threatening jail time unless you not only pay what is allegedly owed but also an additional fee, typically $150 to $200, to take a “financial accountability” course.
Mind you, the DA has not prosecuted the case, nor even verified that the debt is valid. But the DA’s office winds up getting a cut of the fee from the class that the funds-impaired checkwriter was conned into taking. The debt collectors and the DA call these arrangements “partnerships,” presumably in the Ambrose Bierce sense:
When two thieves have their hands so deeply plunged into each other’s pockets that they cannot separately plunder a third party.
The Times points out that the premise of this government-sponsored shakedown is that the people passing bum checks are shysters. But the focus of the course belies that:
Some officials in district attorneys’ offices have quietly raised concerns that the programs are misleading. A November 2009 county audit of Deschutes County, Ore., titled “District Attorney’s Office-Cash handling over revenues,” wondered whether elements of the program could be “disingenuous…
Ms. Yartz (who mistakenly wrote a check on an account she was closing) also questioned the need for a class on budgeting and financial accountability: “If I meant to bounce this check like a criminal, why do I need a class on budgeting?”
The excuse for this program is that district attorneys’ offices were overwhelmed with merchant requests to go after bounced checks where they were unable to collect the debt and alleged fraud. Um, what about saying “no” unless the amount at issue was significant, say at least a few hundred dollars, or having the merchant provide evidence of intent? Instead, this scheme allows the debt collectors to get a windfall from people who’ve stuffed up on relatively small checks (the two examples in the article were each under $100) as well as contributing to erosion of public faith in the legal system.
Consumer attorneys did succeed in getting one debt collector that engaged in this practice, American Corrective Counseling Services, to file for Chapter 11 in the face of class action suits. But its successor CorrectiveSolutions carries on with the same dubious practices and has “partnerships” with more than 140 district attorneys’ offices.
The expression “The best government money can buy” used to apply to big donors getting favored treatment. Strained state and local budgets are now ushering in an era of government backing being procured far more directly.