“National Corrective Group 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. “Today we are taking action to put a stop to these illegal debt collection practices.”

By law, a company operating a bad check diversion program is not able to contact a consumer about the program until a prosecutor's office has reviewed the case and determined the consumer is eligible. The CFPB also said the law required the company to inform consumers of their right to dispute any alleged bounced check violations.

The CFPB also claimed National Corrective Group sent notices on prosecutors' letterheads before any district attorney review took place, and falsely claimed consumers could be prosecuted for writing bounced checks. The bureau also alleged the company violated The Fair Debt Collection Practices Act and the Dodd-Frank Act for using deceptive practices in the financial marketplace.

In addition to the civil money penalty, the CFPB's order would prohibit threats of jail time and other criminal charges being made against consumers, ban the use of district attorney letterhead, and prevent the company from contacting individuals unless the operation is under the supervision of a state or district attorney's office.