It appears the Federal Trade Commission has just successfully taken action against a network of debt collection agencies that was targeting consumers as fake process servers. I’ve covered this and similar groups, here and here.
The FTC has just announced new action in this case.
At the request of the Federal Trade Commission, a U.S. district court has halted a debt collection operation that allegedly deceived and abused consumers – making bogus threats that consumers had been sued or could be arrested over debts they often did not owe.
As part of its continuing crackdown on scams that target consumers in financial distress, the FTC charged two individuals and seven companies in a Corona, California-based debt-collection operation doing business as Rincon Debt Management. The court order stops the illegal conduct, freezes the operation’s assets, and appoints a temporary receiver to take over the defendants’ business while the FTC moves forward with the case.
Operating since March 2009, the defendants have been unjustly enriched by at least $9.4 million, according to documents the FTC filed with the court.
“Consumers have a right to expect that debt collectors will be truthful and abide by the law,” said FTC Commissioner Edith Ramirez. “We allege that, instead, the victims in this case were subject to abusive and illegal debt-collection practices, and that cannot stand.”
The FTC complaint alleges that the defendants targeted both English- and Spanish-speaking consumers. The defendants called consumers and their employers, family, friends, and neighbors, posing as process servers seeking to deliver legal papers that purportedly related to a lawsuit.
In some instances, the defendants threatened that consumers would be arrested if they did not respond to the calls. The defendants also posed as attorneys or employees of a law office, and demanded that consumers pay “court costs” and “legal fees.”
However, according to the FTC, the debt collectors making calls to consumers were not actually process servers, attorneys, or their employees, and the defendants did not file lawsuits against consumers. In addition, in many instances, consumers did not even owe the debt the defendants were trying to collect.
The FTC charged that the defendants’ false and misleading claims that they were process servers or attorneys who had filed – or were about to file – a lawsuit against a consumer violated the FTC Act. In addition, the FTC alleged that the defendants violated the Fair Debt Collection Practices Act by:
- improperly contacting third parties about consumers’ debts;
- failing to disclose the name of the company they represented, or the fact that they were
- attempting to collect on a debt, during telephone calls to consumers;
- misrepresenting the existence of a debt, the amount, and other facts about the debt; and
- failing to notify consumers of their right to dispute and obtain verification of their debts.
While the Temporary Restraining Order was granted, it appears to intentionally not include bank accounts for Asset Filing Services, County Filing Services, Raincross Filing Services, Capital Filing Services, Worldwide Filing Services, Superior Filing Services, Eagle Filing Services, Southcoast Financial Services, and West Coast Filing Services. – SourceCorona California Debt Collection Fake Process Server Operation Stopped by Court by Steve Rhode