It wasn't until she got in touch with Arons that she discovered she wasn't being threatened by Cook County. It was Corrective Solutions, which has contracts with 21 counties in Illinois.

In 2010, yet another class-action suit was filed against the company, this time on behalf of 600,000 victims in California and Pennsylvania. In November, it agreed to pay a $3 million settlement. But because the class was so big, each victim would receive less than $3 dollars. A federal court refused the settlement, ordering both parties back to negotiations.

"The litigation has been hard," says Bob Hobbs, deputy director of the National Consumer Law Center. "Either these companies declare bankruptcy, or they just drag these things on forever and no one gets paid."


Former N.J. Consumer Affairs Commissioner Adam Levin thinks costly financial responsibility classes are “garbage.”
Courtesy of Adam Levin
Former N.J. Consumer Affairs Commissioner Adam Levin thinks costly financial responsibility classes are “garbage.”
Carole Hirth thought she was being threatened with fraud charges by Cook County. Instead, it was debt collection agency Corrective Solutions.
Photo by Will Rice
Carole Hirth thought she was being threatened with fraud charges by Cook County. Instead, it was debt collection agency Corrective Solutions.

As the case languishes in court, advocates hope Congress will finally close the 2006 loophole.

They received a glimmer of hope in October, when President Obama's new Consumer Financial Protection Bureau announced that it would be overseeing debt collectors starting this year. For the first time in history, the feds will require those making over $10 million a year to supply regular reports to ensure they're not deceiving and threatening consumers.

Still, Moira Vahey, an agency spokeswoman, declined to comment on how it would deal with the bad-check programs.

For now, the only oversight comes from those making money on the deals: the district attorneys themselves. And they show little interest in policing the industry.

Take the Minnesota company once known as Financial Crimes Services. In 2009 it was sued for violating the Fair Debt Collection Practices Act. The company agreed to pay $75,000 in penalties and court costs.

Last year, it changed its name to Check Diversion Program, and it's still operating throughout Minnesota and Wisconsin. "We're not a debt-collection company, but a diversion program," says CEO Scott Adkisson. "We send out approved letters. And it's the DA's decision who gets them, not ours. We just manage the program."

The evidence suggests otherwise. In Minnesota's Goodhue County, the program is run by the Red Wing Police Department, which referred inquiries back to Adkisson. Minnesota Attorney General Lori Swanson would not respond to interview requests, either.

Levin believes this lack of oversight may be the key to dismantling the programs: If prosecutors aren't reviewing the cases, collection agencies aren't legally eligible for immunity.

In the meantime, victims like Orr, Schwarm, and Hirth have little recourse but to hire lawyers, paying thousands to defend themselves for bouncing $50 checks at the grocery store.

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go2support

I suggest signing up for a prepaid legal service to handle debt collector harassment. Bill collectors hate it when you lawyer up. I pay $9.95 a month and this gets me all the free cease and desist letters that I could ever need. I've used the legal plan several times and the most I've ever paid was $60 on one occasion when I was quoted over $400 by another attorney outside the legal plan for the same service.

 
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