The CFPB has taken enforcement action against a company thatallegedly used intimidation tactics to collect debts for bouncedchecks.

According to the CFPB, the California-based National CorrectiveGroup threatened consumers with criminal prosecution and jail time.The corporation also allegedly misled consumers by requiring themto enroll in a $200 financial education program to avoid criminalcharges.

If a federal district court approves the CFPB's proposed order,the company would have to pay a civil money penalty of $50,000,establish new consumer disclosures and implement stronger oversightof the bounced check program.

The CFPB's order also mentions companies such as VictimServices, Inc. and American Justice Solutions, Inc., which tookover all of National Corrective Group's contracts and assets duringthe CFPB's investigation.

“National Corrective Group masqueraded as prosecutors and useddeceptive tactics to intimidate consumers into paying hundreds ofdollars in extra fees to avoid potential criminal prosecution,”CFPB Director Richard Cordray said. “We are taking action to put astop to these illegal debt collection practices.”

By law, a company operating a bad check diversion program is notable to contact a consumer about the program until a prosecutor'soffice has reviewed the case and determined the consumer iseligible. The CFPB also said the law required the company to informconsumers of their right to dispute any alleged bounced checkviolations.

The CFPB also claimed National Corrective Group sent notices onprosecutors' letterheads before any district attorney review tookplace, and falsely claimed consumers could be prosecuted forwriting bounced checks. The bureau also alleged the companyviolated The Fair Debt Collection Practices Act and the Dodd-FrankAct for using deceptive practices in the financial marketplace.

In addition to the civil money penalty, the CFPB's order wouldprohibit threats of jail time and other criminal charges being madeagainst consumers, ban the use of district attorney letterhead, andprevent the company from contacting individuals unless theoperation is under the supervision of a state or districtattorney's office.