California Archives

Court Shutters California Debt Collector

Monday, October 3rd, 2011 at 5:54 pm  
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The Federal Trade Commission announced that, at its request, a U.S. District Court shut down three companies doing business as Rumson, Bolling & Associates, a California-based debt collection agency. According to the FTC’s press release, the agency alleged that the debt collector abused consumers and deceived its own clients. The FTC’s complaint said that the debt collection agency:

* 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;

* 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.

When it comes to debt collection agencies, it’s often difficult to know who you’re dealing with. Companies come and go, are bought and sold, and often go by many different names. The FTC complaint highlights this problem, as the defendants included “Forensic Case Management Services, Inc. (doing business as Rumson, Bolling & Associates, FCMS, Inc., Commercial Recovery Solutions, Inc., and Commercial Investigations, Inc.), Specialized Recovery, Inc. (doing business as Joseph, Steven & Associates and Specialized Debt Recovery), Commercial Receivables Acquisition, Inc. (doing business as Commercial Recovery Authority, Inc. and The Forwarding Company),” as well as six individuals.

L.A. Steps Up Debt Collection Efforts

Tuesday, May 31st, 2011 at 5:32 pm  
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parkingticketEver since the financial crisis has gutted tax revenues, an increasing number of municipalities have been turning to debt collection as a way to fill budgetary gaps. Often, cities and towns will contract debt collection out to third-party debt collectors, giving the debt collection agency a percentage of whatever they collect.

Now, according to a story in the Los Angeles Times, the Los Angeles City Council has created a collection “inspector general.” The position, expected to be filled in June with an existing city employee, will determine which fines are collectible (those less than two years old) and which are destined to be written off the books. An estimated $541 million is owed to the city, largely a result of unpaid ambulance bills and unpaid parking tickets.

California Considers Additional Regulation of Debt Settlement Companies

Wednesday, March 9th, 2011 at 5:00 am  
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California State Senator Ellen Corbett has introduced legislation that would further regulate debt settlement companies. According to a press release issued by the Center for Responsible Lending, the Debt Settlement Consumer Protection Act (SB 708) expands the reach of the Federal Trade Commission’s 2010 telemarketing rule so that it applies to all debt settlement companies in California.

Key provisions of the bill include requiring debt settlement companies to screen customers before enrolling them to ensure that the consumer is likely to benefit more than they pay, considering the consumer’s financial situation before enrolling in the program. In addition, it would require debt settlement companies to actually settle the debt before collecting any fees, and would limit the fees to 15% of the difference between the amount paid to settle the debt and the original debt amount. It would also require debt settlement companies to disclose all risks and realities associated with the debt settlement program and make no representations of positive results.

The release quoted Senator Corbett as saying, “Many Californians are struggling right now with trying to make ends meet in this difficult economy. They should not be further victimized by those in the debt settlement business who are seeking to make a profit by exploiting their desperation.”

Feds Arrest Maxwell, Turner & Associates Principals

Tuesday, December 14th, 2010 at 5:00 am  
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According to a report by KERO23 in Bakersfield, CA, federal authorities arrested Stefan Lemar Miller and Paul Anthony Vasquez, who owned the Maxwell, Turner & Associates debt collection agency. The result of a joint investigation by the Internal Revenue Service, the U.S. Attorney, and the District Attorney, the pair were arrested on charges of mail fraud, wire fraud, and money laundering. The investigation alleges that the company engaged in debt collection, but not forward the money to the creditors, charged bogus fees to their clients, and received more than $2.7 million. If convicted, the two, who also operated Stanley, Morgan & Associates in Monrovia, CA, could face 20 or more years in prison and hundreds of thousands of dollars in fines.

Debt Collectors Clog Courts with Lawsuits Against Consumers

Saturday, April 24th, 2010 at 11:29 am  
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A recent article in the New York Times highlights the lengths to which debt collectors will go to put the squeeze on consumers. All too often, debt collectors will sue consumers for questionable debts, causing court calendars to clog and making people spend time, effort, and money defending themselves.

The article highlights a San Jose, California, woman who was sued for a debt she didn’t owe. Not only did the judge dismiss the case, but when the woman countersued LVNV Funding for violating the Fair Debt Collection Practices Act, she won the case.

All too often, though, consumers don’t know how to fight back, and so don’t respond when a debt collection agency takes legal action. In fact, according to the Federal Trade Commission, close to 95% of consumers don’t respond to a debt collector’s lawsuit. If that happens, a judge will typically rule in the debt collector’s favor, leaving consumers in a situation where their wages are garnished or money is taken out of their bank accounts.

The New York Times story points out that, in California alone, lawsuits filed by debt collection agencies have risen 20% over the past five years, and 96,000 were filed in the San Francisco Bay Area in 2009. The bottom line? If a debt collection agency files a lawsuit against you, you need to respond. Quite often, you may not be obligated to pay the debt, but if you don’t show up to defend yourself (which is what the debt collector counts on), you’ll wind up with a judgment against you. That’s why it’s important to engage the services of a fair debt attorney. It shouldn’t cost you a dime, and you may be in a favorable position to countersue under the Fair Debt Collection Practices Act and get a bundle from the unscrupulous debt collector.

Harassment Not Limited to Those Who Owe Money

Monday, August 31st, 2009 at 5:30 am  
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As Bakersfield station KGET reported, debt collector harassment can happen to anyone. KGET notes that, for the past two years, a Bakersfield man received up to five calls per day from NCO Financial. The debt collection agency was looking for someone who didn’t live there, but no matter what the man did, the calls from NCO wouldn’t stop. It took the intervention of the TV station’s help line to convince the debt collection agency to remove the man’s number from their books. An attorney weighing on the matter opined that the consumer may be able to sue NCO for harassment under the Fair Debt Collection Practices Act, even though the man was not a debtor.

California A.G. Gets $1 Million from CashCall

Tuesday, August 25th, 2009 at 1:19 pm  
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California Attorney General Jerry Brown succeeded in obtaining a $1 million judgment against predatory lender CashCall, Inc. Brown argued that the company violated California Business and Professions Code Section 17200. Brown’s press release noted that CashCall:

  • Made excessive and verbally abusive telephone calls at all hours of the day and night;
  • Caused borrowers to incur bank fees by repeatedly trying to collect payments despite knowing there were insufficient funds in the borrowers’ accounts;
  • Threatened to initiate law enforcement and wage garnishment proceedings against borrowers without any basis for doing so;
  • Improperly discussed private financial information with borrowers’ friends, colleagues and neighbors;
  • Failed to honor borrowers’ requests to cancel automatic withdrawals from checking accounts; and
  • Continued to contact borrowers by phone after receiving requests to only contact them in writing.

These practices are also illegal under federal law, namely the Fair Debt Collection Practices Act.