Two years ago, longtime Napa resident Mark Power said he received a series of notices from the Napa County district attorney’s office seeking restitution for a $19 check written to Copperfield’s Books that had bounced.
The notices, printed on the DA’s letterhead stationery, ordered him to pay $230, which covered the $19 check and a “Financial Accountability” class that he was ordered to attend.
Power said he paid Copperfield’s, but has refused to pay the rest or attend the “Financial Accountability” class.
“Our records indicate that you have failed to attend your Financial Accountability class. The District Attorney will not discharge the report(s) of criminal activity against you until all Program requirements, including attending class, have been met,” the official-looking letter from the DA said.
In fact, the collection letter came from Corrective Solutions, a private company retained by the DA’s office to obtain restitution from people who have wrote checks with insufficient funds.
A federal judge may soon approve a settlement in a class-action lawsuit involving two companies running bad check restitution programs, including Corrective Solutions, on behalf of dozens of county district attorney offices, including Napa County’s.
The $3 million settlement, which will come before a federal judge in San Francisco on Nov. 16, settles a lawsuit that five consumers elsewhere in California filed after being threatened with criminal prosecution if they did not pay outstanding balances and signed up for “Financial Accountability” class. The notices customers received carried their local district attorney’s letterheads.
The $3 million settlement involves bad-check restitution programs operated by National Corrective Group, doing business as Corrective Solutions, and American Corrective Counseling Services in the name of district attorneys in California between Jan. 4, 2006, and Aug. 31, 2011, or in Pennsylvania between Jan. 25, 2004 and August 31, 2011. The $3 million is slated to be paid by the companies’ insurance.
Paul Arons, a Washington state attorney who worked on the original complaint but is no longer involved in the case, said up to 800,000 people may be affected.
Power has a notice from Smith Settlement Administrator notifying him that he may be eligible for a payment of $75 because he had received a restitution notice.
Power said he does not want to take the $75 settlement, preferring to keep his options open.
“It’s wrong, wrong, wrong,” Power said. “I’ve been threatened criminally.”
Napa County District Attorney Gary Lieberstein was on vacation and not available for comment.
The Napa County district attorney’s office said it could not comment on Power’s case or say how many Napa residents had been billed by private companies using the DA’s letterhead stationery.
The program is under review, said Michael Donovan, chief investigator for the Napa County district attorney’s office.
“Napa County was not a defendant in the lawsuit in question and did not incur any expenses defending or settling the lawsuit,” he said.
Collecting bad checks using debt-collection companies amounts to a diversion program, one that includes an educational component, Donovan said.
The program was “developed to obtain restitution for local businesses that provided goods and services only to later learn that they had accepted a ‘bad’ (non-sufficient fund) check as payment,” Donovan said.
“Neither the County of Napa nor the (Napa County district attorney’s office) pays any fees or other compensation to Corrective Solutions,” Donovan said.
“Such check programs are authorized by statute as are the fees charged by the program,” he said.
In the meantime, Power may not be able to sue. Customers who received notices between 2006 and 2011 had until Sept. 24 to opt out of the proposed class-action settlement and retain the right to file a lawsuit of their own, according to settlement documents posted on smithsettlement.com.
According to his notice, he has until Feb. 14, 2013, to send a claim to receive a payment.
But most people may not be even know about the settlement, Arons said. “The consumers are not benefiting from the settlement,” he added.