Earlier this month the Federal Trade Commission (“FTC”) announced it
reached a settled with Rincon Debt Management, and its two
principal owners, Jason R. Begley and Wayne W. Lunsford, in a long
running case against the collection agency for threatening
to sue and arrest consumers for debts they did not in fact
owe. Under the settlement agreement the collection agency
must sell off more than $3.3 million of its assets to refund
consumers involved in the agency’s collection efforts and
furthermore, the owners are banned from involvement in the
collection industry indefinitely.
The investigation against Rincon has been developing since April
of 2009 and in October of 2011, a court ordered the agency to close
its doors. The FTC alleges the collection agency abused
predominantly Spanish speaking consumers by threatening to sue or
arrest them for debts most of them did not owe. The agency
focused on debtors who were strapped for cash and already
vulnerable and then forced them to make payment with fear and
intimidation. The collectors misrepresented their ability to
arrest the debtors and send them to jail for refusal to make
payment, a tactic that is illegal and prohibited under the
Fair Debt Collection Practices Act (“FDCPA”). The
collection agency contacted family, friends, employers and
neighbors of the debtors’ it sought to obtain money from and
pretended to be process servers looking to serve legal
papers. The complaint alleged that in addition to
representing itself as process servers, the collection agency also
posed as attorneys and demanded payment from the debtors of not
only the debt, but of court costs and legal fees when it had not
even filed a lawsuit.
The order issued by the FTC held the collection agency
responsible for payment of $23 million but suspended the judgment
and required payment of only $3.3 million in light of the fact the
agency owners did not have funds available to them in excess of the
$3.3 million. The FTC stated, however, that should it find
out that the information provided to it by the agency was
inaccurate, the entire $23 million would become
due.
If you are involved with a
collection agency and feel your rights have been violated under
the FDCPA and would like to speak with an attorney, contact SmithMarco P.C. for a free case
review.