Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Obtains Permanent Ban against Allegedly Abusive Debt Collectors, (Jan 17, 2013)

By E. Darius Sturmer, J.D.

The remaining defendants in the FTC’s case against a Van Nuys, California-based debt-collection operation doing business as Rumson, Bolling & Associates have agreed to a settlement that permanently bans them from the debt collection business, the FTC has announced.

The settlement resolves FTC allegations that three debt collection companies, their owner, and the companies’ principals subjected consumers to abusive debt collection practices and deceived their small business clients. Under the settlement, defendants will pay $700,000. In a separate settlement, the FTC also obtained over $400,000 in judgments against three other companies the same owner controlled, which were alleged to have received funds from the defendants’ activities.

The FTC’s complaint alleged that the defendants used multiple illegal debt collection practices nationwide. Among other things, the agency alleged that the defendants berated consumers with obscene and profane language, threatened them with physical harm, improperly disclosed consumers’ debts to their employers, co-workers, neighbors, and other third parties, and falsely threatened consumers with lawsuits, arrest, seizure of their property, or wage garnishment. Several consumers reported that defendants even threatened to dig up the bodies of consumers’ deceased relatives for alleged non-payment of funeral bills.

The FTC also alleged that the defendants deceived their small business clients. Using the slogan “no recovery, no fee,” the defendants promised that they would collect their clients’ past-due accounts on a contingency basis. The FTC alleged that, in many cases, the defendants collected money for a client, then kept all of the money or more than they were entitled to keep. In some cases, the defendants asked clients for additional fees, purportedly for legal expenses in filing a lawsuit that would “guarantee” the successful collection of a debt. However, in many cases, the defendants failed to file the promised lawsuits and the clients never received any money in satisfaction of the debt.

These practices violated both the Fair Debt Collection Practices Act and the FTC Act, the Commission claimed.

Under the main settlement, the defendants agreed to a $33.8 million judgment, which will be suspended due to inability to pay after they turn over $700,000. In addition, under the same settlement, two of the principals agreed to judgments of $43,822 and $233,973, respectively, which will be suspended due to their inability to pay. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgments will become due.

In the other settlement, three other companies that the owner controlled agreed to turn over $403,487 to the FTC. The FTC named these companies as relief defendants, alleging that they did not participate in the defendants’ wrongdoing but still profited from it.

The FTC has additionally filed for a default judgment against another company, also named as a relief defendant, that was owned and operated by the same owner.

Companies: Forensic Case Management Services, Inc.

News: ConsumerProtection FederalTradeCommissionNews