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Rogue Debt Collection Companies Get Clamped Down On by FTC

By Linda Dobel
TMCnet Contributor

Debt collection companies that persist in putting a black mark on their entire industry have drawn the attention of an entity far more powerful than the consumers upon whom they have preyed—the Federal Trade Commission (FTC (News - Alert)).

According to a report from ABC news, the debt collection industry is the number-one subject of complaints received by the FTC. In fact, the ABC report said the FTC received 144,159 filings against collection agencies in 2010.

 The government agency is now clamping down on debt collection organizations across the country for their abusive practices, including seven in the State of California.

One company in particular in California, Rincon Management Services LLC, which is based in Corona, has had its operations halted temporarily and its assets frozen as a result of its egregious actions. According to California Watch, which was founded by the Center for Investigative Reporting, the FTC says Rincon told consumers—who had no legal suits filed against them for owed debt—that unless they quickly returned the call to Rincon, they would be arrested, served legal papers or have their wages or property garnished, none of which the company was legally authorized to do.     

Tom Syta, assistant regional director for the FTC, was quoted in the California Watch piece as saying, “They gave them a phony case number making it sound like it was a filed case in court, all in what was an apparent attempt by the debt collector to get the debtor to call back.”

Rincon Management Services, which reportedly brought in revenue of  $9.4 million or more in the last two years, has operated under 10 or more names that include Union Management Services, Rincon Filing Services and Pacific Management Recovery, according to California Watch.

Those companies and Rincon President Jason R. Begley and Rincon Manager Wayne W. Lunsford will go through civil proceeding should the FTC win an injunction against them, which could result in a permanent freezing of company assets and possibly a judgment for repayment of money to consumers from whom it wrongfully collected payment, California Watch said. Criminal charges of extortion and racketeering could also be sought by law enforcement agencies.

Another case in California cited by ABC News involved a company called Rumson, Bolling & Associates that allegedly threatened consumers with violence and low-level name calling that ABC said included “deadbeat,” “white trash,” “piece of crap,” “crackerhead,” “scumbag” and “lowlife.” The company also reportedly threatened to have the body of a woman’s daughter dug up from its grave because the woman didn’t pay the funeral costs and said they would eat her dog. A temporary restraining order has been placed on the company by the Central District court in California.

While these cases are disturbing, Vickie Kirk, executive director of the trade organization for debt collectors called California Association of Collectors, was quoted by California Watch as saying they are “incredibly rare,” and stated, “This is one of the most highly regulated industries imaginable.”

In other news, TMCnet reported, “Debt collectors are frustrated…by what they perceive to be outdated laws governing the practice of debt collection. Specifically, they point to the Fair Debt Collection Practices Act.”