In tough economic times, with many people out of work and struggling to pay their bills, it’s no surprise that debt collectors are out in force. But recently, the Federal Trade Commission moved to shut down two California-based operators that handled collections nationally, including one that is accused of using tactics so egregious that they resemble scenes from a film noir script.

The first case involves a company operating from Van Nuys, Calif., under various names, including Forensic Case Management Services and Rumson, Bolling Associates, which hired itself out to small businesses on a contingency basis. In other words, it charged no fee unless it was successful in collecting on a debt. (Its slogan was “no recovery, no fee.”)

The F.T.C.’s complaint, filed in Federal District Court for the Central District of California in Los Angeles, charges the company with violations of the F.T.C. Act and the Fair Debt Collection Practices Act, which outline what firms can and cannot do to collect a debt. (Harassment and threats of physical harm, as you might expect, are not allowed.) You can read about the rules here.

When the company’s collectors got a consumer on the phone, the commission claims, representatives used abusive language — most of which can’t be published here — to bully people into making a payment. (The least crude of the terms included “deadbeat,” “lowlife” and “piece of crap.”) The company also divulged some people’s debts to neighbors and co-workers.

The commission’s complaint offers two jaw-dropping examples. In one, the callers attempted to collect from a woman who was unable to pay the balance due for her daughter’s funeral. “During the calls, Rumson, Bolling Associates told her they were going to dig her daughter up and hang her from a tree if she did not pay the debt,” the complaint says. Callers also threatened to eat her dog and even to kill her if she didn’t pay, the complaint says.

Another instance involved a woman who had fallen behind on her payments to a funeral home, after both of her sons died within a week of each other. The callers “asked how she would feel if her son’s body was dug up and dropped outside her door,” the complaint states.

In some cases, the consumers were terrified enough to turn over some cash. But even then, the company “in many cases” didn’t send the money along to its clients, “instead keeping the proceeds from the collection efforts for themselves.”

On Sept. 27, the court granted the F.T.C.’s request to stop the company’s operations and continue a freeze on its assets. The court also appointed a receiver to oversee the company while the agency pursued the case.

Christopher Pitet, a lawyer for the defendants, said they disputed the claims. “This was a business committed to running lawfully,” he said. “If there were violations of the act, it was by employees not acting in accordance with company policy.”

In the second case, also filed with the Federal District Court for the Central Division of California, the F.T.C. claims that collectors with seven related companies operating out of Corona, Calif., including Rincon Management Services, used “bogus threats” of lawsuits to intimidate consumers into paying debts that they often did not even owe.

The callers posed as lawyers or process servers, the complaint says, and sometimes called the consumer’s employer or family in an attempt to trick them into thinking they, too, could face legal action if they did not help the collector obtain payment.

The company gave employees scripts, in both English and Spanish, that included tips like “contact relatives instead of the debtor on the initial call to create urgency,” the complaint says.

On Oct. 11, the court granted the commission’s request for a temporary restraining order against Rincon, which halted its operations, froze its assets and appointed a receiver to run the business while the agency pursued the case.

Calls to phone numbers listed for Rincon were not immediately returned.

Have you had an unpleasant experience with a debt collector?

Article source: http://feeds.nytimes.com/click.phdo?i=613d1ff0982a99822fd1d95c1917bd4f