Collection agency Bounceback Inc., based in Kansas City, Mo., is accused in a federal lawsuit of "renting" county prosecutor seals to threaten people with jail time if they did not pay their debts. The lawsuit, filed in the state of Washington, states that Bounceback gave the prosecutors a share of the collection fees.

Privatized check enforcement programs - such as what Bounceback employs - are legal in Washington and allow companies to contract with county prosecutors in exchange for a fee or percentage of collection charges. Oregon recently banned public agencies or officials from allowing collection entities to use official seals or letterheads.

The lead plaintiffs, Wodena Cavnar, Rosaline Terrill and Linda Parks, are seeking class-action certification in their suit against Bounceback; parent company, Stone Fence Holdings; and director Gail Krieg. The defendants are accused of violating the Fair Debt Collection Practices Act and the Consumer Protection Act. The plaintiffs reported they received letters that warned of criminal charges and prosecution if they did not pay the amount of the check and more than $180 in fees.

Bounceback did not disclose the letter was from a collection agency and not a law enforcement office, the complaint states. The demand letters contain a toll-free number supposedly to the local prosecuting attorney's office, but actually for Bounceback, according to the complaint.

Bounceback officials could not be immediately reached for comment.

The complaint continues: "Bounceback's operations are much like those of any other high-volume debt collector: It solicits its business from large national retailers and other merchants, receives electronic information about unpaid checks directly from those merchants and sends out standardized collection notices to consumers. There is one crucial difference, however: Under Bounceback's so-called 'Check Enforcement Program,' county prosecutors rent out the prosecutor's seal and letterhead to Bounceback in exchange for a cut of the collection fees, thereby cloaking ordinary civil debt collection under a sham criminal diversion program. Consumers who receive Bounceback's letters are led to believe they are from the prosecutor, not from a private collection agency."

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