Firm that operates bad-check pretrial-diversion programs sued by CFPB

A firm based in Kansas City, Mo., that operates bad-check pretrial diversion programs on behalf of more than 90 district attorneys’ offices throughout the country is being sued by the consumer financial protection agency over “deceptive and otherwise unlawful” debt collection acts or practices affecting more than 19,000 consumers.

The Consumer Financial Protection Bureau (CFPB), in a filing Wednesday, alleged that BounceBack Inc. violated the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act of 2010 (CFPA). The CFPB said it is seeking injunctions against BounceBack, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of a civil money penalty.

The complaint said that since at least 2015, in the course of administering these bad-check pretrial-diversion programs, BounceBack used district-attorney letterheads to threaten more than 19,000 consumers with prosecution if they did not pay the amount of the check, enroll and pay for a financial-education course, and pay various other fees. The firm, the CFPB said, did not reveal to consumers that BounceBack – and not district attorneys – sent the letters. BounceBack also did not reveal that district attorneys almost never prosecuted these cases, even when consumers ignored BounceBack’s threats, it said. It added that in most cases, BounceBack did not refer cases for prosecution, even if the check writer failed to respond to its collection letter.

The bureau said BounceBack’s letters also failed to include disclosures required under the FDCPA. The Bureau alleges that BounceBack’s conduct violated the FDCPA, was deceptive under both the FDCPA and the CFPA, and that its violations of the FDCPA constituted violations of the CFPA.

Consumer Financial Protection Bureau Sues Debt Collector BounceBack, Inc.