Check Bounced? Be Scared

You may already be judging these consumers and you may think this issue has nothing to do with you, but it does. That's because Congress is considering legislation to exempt check-diversion companies from the Fair Debt Collection Practices Act, which prohibits deceptive and abusive collection methods.

The proposed legislation, which is being pushed by ACCS and the National District Attorneys Association, would amend the collection act to essentially allow check-diversion companies to be excluded from the definition of a debt collector.

Paul Logli, the president of the district attorneys group and state's attorney for Winnebago County, Ill., said the exemption is needed to protect prosecutors and the companies they hire from consumer lawsuits.

Interesting position considering that civil lawsuits have been filed around the country by consumers who claim they were mistreated by check-diversion companies.

Deepak Gupta, a staff attorney for Public Citizen's litigation group, said there are at least six pending class-action lawsuits covering consumers in 13 states.

ACCS denies any wrongdoing.

"The allegations against ACCS and our district attorney partners are completely baseless," the company wrote in a statement in response to questions I raised.

Logli of the district attorneys association also said that even though these companies are private entities, they are working on behalf of local and state prosecutors and thus deserve the same exemption prosecutors get under the federal debt-collection law.

"The original [law] did not fully foresee the specific type of relationship we have with America's prosecutors to improve the efficiency of the criminal justice system," ACCS said in its statement.

Gupta of Public Citizen countered: "There is a crucial difference between the government and a for-profit contractor."

You may wonder what the current law says about debt collection. Well, it says you can't harass people. You can't lie. You can't be abusive. You can't overcharge people. And if there isn't a real possibility of prosecution, you can't use the threat of jail to coerce people to pay up. If the prosecutors are doing their job, then there is no need for an exemption.

Every consumer ought to be paying attention to this legislation because if it passes (it's already been approved by the House and is now being considered by the Senate), it will erode our consumer rights -- not our right to bounce checks, but our right to be treated fairly when we do make a mistake.

It's preposterous to amend the Fair Debt Collection Practices Act to grant private, for-profit companies the same immunity given to state and local prosecutors. What won't be fair is if Congress allows check-diversion companies to go unchecked for abusive and unfair practices.

2006Washington Post Writers Group

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

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