Collection Agency Settles Class-Action Lawsuit for $2.55 million

A California check collection firm Monday agreed to a $2.55 million judgment to settle a class action lawsuit in Pennsylvania. It is the first in a series of lawsuits against the company.

American Corrective Counseling Services (ACCS), based in San Clemente, Calif., agreed to the settlement Monday in a Delaware bankruptcy court, according to the Associated Press. The company did not admit any wrongdoing.

ACCS filed for bankruptcy protection in January of this year.

The lawsuit said that the company sent out letters to citizens that had bounced checks at various businesses. The letters appeared to come from district attorney offices around the state of Pennsylvania, warning the recipients that they were under criminal investigation for bouncing checks. ACCS said that they could clear up the matter if the consumer paid the debt with a penalty and attending a one-time education course.

Although ACCS was contracted with 20 different district attorneys in the state and the letters were legal, the civil lawsuit noted that it was a deceptive and unethical practice to threaten consumers with criminal action when none was likely to be forthcoming.

Approximately 15,000 Pennsylvanians were represented in the lawsuit by the Community Justice Project in Pittsburgh, according to the AP. Since ACCS cannot pay the $2.55 million settlement, the Project hopes to get the money from the company’s insurer.

ACCS faces more class-action lawsuits in California, Florida and Indiana.

In late 2007 and early 2008, ACCS lost a series of cases that exposed it to civil lawsuits. The firm argued that it was shielded from civil cases due to its business relationships with public offices (“ACCS Defends ’Sovereign Immunity’ Case as Public Citizen Mulls Class Action Suit,” Feb. 11, 2008). But after the company lost two cases where it was ruled that they were subject to lawsuits, consumer attorneys began to amass classes to go after ACCS.

Officials with ACCS could not be reached Wednesday for comment. But an ACCS official told insideARM last year that district attorneys were on their side in the matter.

"If we’re guilty, the DA’s office wouldn’t have been there arguing on our behalf,” ACCS Senior Vice President Kirk Barrus told insideARM, referring to a "friend of the court" brief filed on behalf of ACCS by an attorney with the California District Attorneys Association.