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Feds target intimidating debt-collection tactics

Consumers across the country who bounced checks, even for only a few dollars, received letters on stationary purporting to be from a prosecutor's office threatening prosecution unless they paid their debt and enrolled in costly financial counseling.

But the letters sent over a nearly four-year period weren't from a prosecutor. They were from a debt collector, according to the Consumer Financial Protection Bureau, which went after the company for going far across the line of what debt collection companies are allowed to do under federal law.

The order names National Corrective Group, a California-based company that operates nationwide, and several related entities that purchased its assets and took over its operations during the CFPB probe.

The proposed order, if approved by a federal district judge, would impose a $50,000 fine and halt the illegal activities, the agency said.

The companies sent letters on the actual letterheads of prosecutors' offices, using their own phone number, to get consumers to call and buy into their scheme, the CFPB said.

The firm "masqueraded as prosecutors and used deceptive tactics to intimidate consumers into paying hundreds of dollars in extra fees to avoid potential criminal prosecution," CFPB Director Richard Cordray said in a statement.

Less than one percent of those getting the letters warning of criminal charges had their cases referred to a prosecutor's office, the CFPB said.

The federal Fair Debt Collection Practices Act prohibits tricking consumers into paying a debt.

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