Facts

A class action was filed on behalf of several hundred thousand bad check writers throughout California against American Corrective Counseling Services Inc. under the Fair Debt Collection Practices Act.

Plaintiffs were sent letters falsely telling them that to avoid prosecution they had to participate in a diversion program that required them to pay about $170 in illegal fees.

Plaintiffs asserted the following causes of action: violation of California Constitution; violation of the Fair Debt Collection Practices Act; violation of Business and Professions Code Section 17200 et seq.; conversion; fraudulent misrepresentation; and negligent misrepresentation.

PLAINTIFFS' CONTENTIONS:
Plaintiffs claimed that they were regularly charged illegal fees by the private companies hired by the district attorneys across the state to collect on the bad checks.

Damages

Planitiffs sought $30 million in damages.

Result

The jury returned a verdict for $12,000 in statutory damages. Equitable relief, including injunctive relief and restitution, remains to be tried to the court. The court ruled that the debt collector violated federal and state law by sending collection letters in the name of the district attorney, rather than in its own name, by making false threats of prosecution, and by charging illegal fees.