Calif. Debt Firm Settles Pa. Class-Action Suit

A California debt collection company has agreed to a $2.55 million judgment to settle a lawsuit brought by thousands of Pennsylvanians who claim they were wrongly led to believe they had to pay costly fees to avoid criminal charges for bouncing checks.

American Corrective Counseling Services admits no wrongdoing as part of the settlement approved Monday in bankruptcy court in Delaware.

The company sent out letters as recently as last winter purporting to be from various Pennsylvania district attorneys' offices to people who bounced checks.

The letters indicated that a crime had been committed, but that the check bouncers could clear up the matter by paying off the checks and various fees and by attending a financial accountability class.

In one case, an elderly woman wrote a bad check for $27.17 to Kmart and was informed she had to pay $72.17 in fees, plus another $170 for the accountability class.

"She thought that she was going to be arrested. She thought that a charge had been filed and she was going to go to jail," said Donald Driscoll, an attorney with the Community Justice Project in Pittsburgh, which represents the plaintiffs' class.

Most cases were unlikely to be prosecuted because the people did not mean to bounce the checks, Driscoll said.

Driscoll said because the company doesn't have the money, he hopes to collect the settlement from the debt company's insurer on behalf of about 15,000 Pennsylvanians. People who had to pay fees and attend class could get a couple hundred dollars each, Driscoll said.

An attorney for American Corrective Counseling Services declined to comment Tuesday.

Driscoll said he doesn't believe the debt collection program is allowed under Pennsylvania law.

ACCS contracted with about district attorneys in at least 20 Pennsylvania counties. Prosecutors received fees under their contract with ACCS to resolve bounced check cases outside of court, Driscoll said.