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District attorney ends private vendor's bad-check program

GAZETTE FILE PHOTO
Northwestern District Attorney David E. Sullivan has ended a bad-check enforcement program with a private vendor after questions were raised about the company's business practices.

GAZETTE FILE PHOTO Northwestern District Attorney David E. Sullivan has ended a bad-check enforcement program with a private vendor after questions were raised about the company's business practices. Purchase photo reprints »

Sullivan, who was listed as program administrator in those letters, joined several other Massachusetts district attorneys in ending relationships with CorrectiveSolutions and BounceBack in recent months. The two companies also are not licensed to work in Massachusetts, but may not have to be under a federal debt collection exemption, according to a report in Sunday’s Boston Globe.

The Northwestern district attorney’s office had entered into a contract in March 2009 with Missouri-based BounceBack, prior to Sullivan taking office. The pact, which the Gazette reviewed, was never formally signed and executed. Nevertheless, the company has since been administering a bad-check enforcement program that seeks to get restitution for merchants and consumers from those who write bad checks in Hampshire and Franklin counties. Several other state district attorneys employed Corrective Actions, a company that has been subject to recent class-action lawsuits, for the same purpose. At least two federal court decisions in Spokane County, Wash., have upheld BounceBack’s programs with a district attorney’s office there.

“I was not comfortable having BounceBack give the erroneous impression that their enforcement letters were coming directly from our office,” Sullivan told the Gazette on Sunday. “This practice, coupled with the issues raised about CorrectiveSolutions by the Massachusetts Division of Banks, led me to conclude that our office would no longer be affiliated with BounceBack or any other bad-check enforcement administrator.

“It didn’t seem in good faith to me,” he added.

Sullivan said he began looking at the program last fall, around the time the Globe began posing questions to district attorneys about the contracts. He terminated the Northwestern district’s relationship with BounceBack in January, he said.

Bad-check diversion programs like the one used here are not uncommon and many district attorneys make no bones about promoting them around the country. The office of the Onondaga County district attorney in New York, for example, provides an explainer on its website about its check enforcement program with BounceBack, stating that in addition to assisting merchants and others with recovering losses from dishonored checks that were intentionally written, the program also reduces the caseload for law enforcement and the courts.

Writing bad checks is a criminal offense in Massachusetts, but only after notice to the offender and an opportunity to make good on the check. The outsourced administration of collecting on bad checks, typically under the $250 threshold, has been a successful way to get restitution for merchants while not subjecting an offender to a criminal proceeding and record, Sullivan noted.

“You want to help the merchants and consumers that get ripped off, but at the same time, I don’t want people to think that we’re collecting these monies,” Sullivan said of the questions raised about his office’s former relationship with BounceBack. “This was a way for us to reduce the burden on police departments and clerk magistrates as well.”

On the whole, Sullivan said, the program diverted offenders away from criminal prosecution, made victims whole, and allowed prosecutors to more appropriately focus their resources.

Among the more serious questions raised in news reports about the relationships between district attorneys and the private companies is the fact that some district attorneys, including in Massachusetts, have received a cut of the proceeds from the debt-collection work. In addition, some of the companies, including CorrectiveSolutions, have collected on debts when contacted by victims without first having those bad check cases reviewed by the district attorney’s offices. Those reviews can determine whether there is probable cause that a crime may have occurred.

Sullivan said neither scenario applied to the Northwestern district attorney’s office’s relationship with BounceBack.

“They (bad check cases) were pre-screened by us,” he said. “We never got any financial benefit from these folks.”

The companies have reaped significant profits running collections, however. Under the terms of BounceBack’s contract with the Northwestern district attorney’s office, the company was entitled to the $145 fee for a required home study course (an educational component to the program for offenders) and a $40 processing fee per check. Bad-check writers also were required to pay a $15 fee to victims to help cover costs incurred as a result of the bad checks. Sullivan said about 40 to 50 merchants used the program in this jurisdiction and that BounceBack had notified about 300 merchants about the service, according to information recently provided to him.

Now that he has scrapped the program and any future dealings with such companies, Sullivan said the DA’s office has developed a self-help brochure for merchants and consumers who are victimized by bad-check writers. The brochure includes information on what to look for when accepting checks, how to handle bad checks, and what it takes to prosecute a bad-check writer. The materials also explain how to proceed, either through the courts or through local police when seeking a criminal complaint.

“It will give them the information to empower them to handle these matters in the preliminary stages,” Sullivan said.

Dan Crowley can be reached at dcrowley@gazettenet.com.

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