The FTC Cracks Down on Debt Collection Practices
Debt collectors who use egregiously offensive tactics in defiance of federal consumer protection laws face serious consequences. That’s the message sent by the Federal Trade Commission (FTC) in its recent settlement with the principal owners of Rincon Debt Management, a former debt collection operation based in California.
In a March 28 consent judgment, a district court in California ordered Rincon’s owners, Jason Begley and Wayne Lunsford, to hand over $3.3 million in assets, which will be used to provide refunds to victims who paid Rincon fees they didn’t actually owe.
According to the FTC, Rincon mistreated consumers through abusive actions that included pretending to be attorneys, threatening consumers with lawsuits or arrest, and demanding payment of legal and other fees. These actions violated the Fair Debt Collection Practices Act (FDCPA).
The FDCPA protects consumers from abuse by third-party collectors by outlawing a variety of activities. For example, a debt collector can’t harass a consumer by calling several times during the week or using profane language, mislead a consumer by pretending to be an attorney, or embarrass a consumer by telling employers, neighbors, or friends that the consumer owes a debt.
“These guys were violating every one of those provisions, including collecting extra fees that the consumer didn’t owe and the collector wasn’t entitled to,” said Maricela Segura, Federal Trade Commission staff attorney. “It was essentially fraud. They were a particularly bad actor preying upon people’s ignorance about the process.”
Protecting consumers against abuse by debt collectors starts with educating them about unfair practices, said Sergei Lemberg, a Connecticut attorney who represents consumers in fair debt cases.
“If consumers don’t know about the FDCPA, they won’t know that they have a way to fight back,” Lemberg said.