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FTC Settlement Bans Individuals from Working in Debt Collection Industry

January 21, 2013

If you’re in the debt collection business, you can be fairly sure you’ve done something wrong when the Federal Trade Commission (FTC (News - Alert)) permanently bans you from working in the business in the future. This is precisely what the FTC has done to four individuals working for the firm Rumson, Bolling & Associates and associated companies.

As part of a crackdown on scams that target consumers in financial distress, the FTC filed a complaint in 2011 against six people and three companies involved in a Van Nuys, California-based debt-collection scam. The individuals and companies were accused of engaging in abusive and illegal debt collection practices. Though the business was centered in Van Nuys, the business had outlets across the U.S.

According to the FTC, the individuals in the case harassed and abused consumers by threatening physical harm and death to them and their pets, threatened to desecrate the bodies of deceased relatives, and used obscene and profane language. They also improperly revealed consumers' debts to third parties, such as the consumers' employers, co-workers, neighbors, and family members; falsely threatened consumers with lawsuits, arrest, seizure of their assets, or wage garnishment; and falsely claimed that consumers would be liable for legal fees incurred in the collection of the debt.

In addition to abusing debtors, the individuals and businesses are charged with deceiving their clients.  Though the companies claimed to collect debts on a contingency basis (without charging for unsuccessful attempts), it is alleged that 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, according to the FTC’s filings.

Suits against three of the individuals involved were settled last year, and the latest settlement is against three more defendants, who have been ordered to pay $700,000 (the original judgment of over $33 million was reduced when it became apparent that the defendants could not pay), and are permanently banned from the debt collection business. They are: David M. Hynes II and Lorena Quiroz-Hynes of Rumson, Bolling & Associates, as well as James S. Hynes and Heather True of several related companies.

The defendants are accused of violating the Fair Debt Collection Practices Act, which bars deceptive, abusive, and unfair debt collection practices, and the FTC Act, which more generally bars deceptive and unfair commercial practices.

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Edited by Brooke Neuman

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