BounceBack, Inc. and Gale Krieg
On December 9, 2020, the Bureau filed a lawsuit in the United States District Court for the Western District of Missouri against BounceBack, Inc. BounceBack, based in Kansas City, Missouri, operates bad-check pretrial-diversion programs on behalf of more than 90 district attorneys’ offices throughout the United States. The Bureau alleged that since at least 2015, in the course of administering these bad-check pretrial-diversion programs, BounceBack used district-attorney letterheads to threaten more than 19,000 consumers with prosecution if they did not pay the amount of the check, enroll and pay for a financial-education course, and pay various other fees. BounceBack did not reveal to consumers that BounceBack—and not district attorneys—sent the letters, or that district attorneys almost never prosecuted these cases, even against consumers who ignored BounceBack’s threats. In fact, in most cases, BounceBack did not refer cases for prosecution at all. BounceBack’s letters also failed to include disclosures required under the Fair Debt Collection Practices Act (FDCPA). The Bureau alleged that BounceBack’s conduct violated the FDCPA, was deceptive under both the FDCPA and the Consumer Financial Protection Act of 2010 (CFPA), and that its violations of the FDCPA constituted violations of the CFPA.
On August 27, 2021, the Bureau filed an amended complaint, which also named BounceBack’s president and majority owner, Gale Krieg, and alleged that Krieg exercised control over BounceBack and violated the CFPA because, among other things, he materially participated in and oversaw BounceBack’s deceptive activities. On September 21, 2021, the Bureau filed a proposed stipulated final judgment and order to resolve the lawsuit, which the court entered on November 1, 2021. The stipulated judgment and order requires BounceBack and Krieg to pay about $1.4 million to redress consumers, which amount would be suspended based upon defendants’ demonstrated inability to pay more upon BounceBack’s and Krieg’s compliance with the certain provisions of the judgment and order including paying a $30,000 civil money penalty. The order also permanently bans BounceBack and Krieg from, inter alia, engaging in debt collection related to any consumer financial product or service.