Last December, it was reported in several media that district and prosecuting attorneys in many states were hiring private companies to send letters to writers of bad checks on DA letterhead, trying to collect the checks. Payments, however, were made to the companies on behalf of the DA’s and payees. This raised questions of whether the DA’s and the companies were complying with state and federal debt collection law. That remains unresolved, but a bill has just passed the Oregon Senate that would authorize and regulate the program.
Federal debt collection law excepts companies hired by DA’s for a check enforcement program from debt collection regulations, but only if the DA determines that there was reason to believe the check writer had committed a crime in writing the bad check. In Washington, that requires a finding that the writer knew the check would bounce. In Oregon, either knowledge that the check would bounce or failure to pay up within 10 days of a subsequent demand is required. There has been at least one suit in Washington challenging a check enforcement program for failure to make the necessary investigations before referring a case into the program. Conversely, the Oregon Department of Justice investigated check enforcement programs earlier this year and chose not to take action.
The Oregon Bill
The bill now pending in Oregon has several provisions. It authorizes the hiring of private companies to collect debts under a check enforcement program, but it requires the DA’s address to be listed as the address for payment (instead of the current practice of the company’s address) and prohibits the use of the DA’s name, letterhead, or seal. Finally, it amends state debt collection law to prohibit debt collectors from using a DA’s name, letterhead, or seal.
Effectively, if the bill passes the House, these changes should restrict DA’s check collection letters to those directly associated with the check enforcement programs and require the DA’s to handle the return mail. This may discourage DA’s from overusing the program. Seceral DA’s who have check enforcement programs, however, are lobbying against the bill, so it is possible it might not pass the House despite bipartisan support in the Senate.
There does not appear to be a similar bill pending in Washington.
If you receive a letter on DA’s letterhead about a bad check, remember that not all bad checks are crimes, but there may be additional civil damages due. You may want to consult a lawyer about your rights before deciding whether to dispute the letter or your placement in the enforcement program, or to pay.