Shuttered ‘Elite’ Debt Collection Firm Settles With FTC Over Consumer Abuses

A shuttered debt collection firm that had touted itself as an elite collection agency in the aviation industry has reached a settlement agreement with the Federal Trade Commission over alleged consumer abuses including harassment and threats of physical harm.

California-based Debt collection firm Rumson, Bolling & Associates claimed in 2010 that it was in the “top 5 percent of collection agencies for the aviation industry.” However, the firm’s operation was halted last fall by a U.S. district court at the request of the FTC, which had filed a complaint against the firm over allegations of illegal business practices. The company’s assets were frozen, a receiver was appointed to run the company, and four people and three companies were charged with multiple violations of the Federal Trade Commission Act and the Fair Debt Collection Practices Act.

The defendants allegedly “harassed and abused consumers by threatening physical harm and death to them and their pets, threatening to desecrate the bodies of deceased relatives, and using obscene and profane language. The defendants also allegedly 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” (“Two Defendants in Abusive Debt Collection Case Are Banned from the Industry,” FTC press release, March 15, 2012).

Although the defendants used the slogan “no recovery, no fee” when soliciting small business and other clients, claiming that they would collect a fee only after successfully collecting a debt, the defendants in reality allegedly deceived clients by collecting money from consumers and keeping more than they were entitled to — sometimes all of it — instead of forwarding collected debts to clients. The defendants also allegedly asked for additional fees to file debt collection lawsuits that would “guarantee” the successful collection of a debt, but many times failed to file such lawsuits on behalf of clients, who in such cases never received any collected debts.

Under terms of the settlement agreement, Frank E. Lindstrom Jr., a manager in the operation, has agreed to pay $673,000, suspended except for $29,500 due to an inability to pay. A second manager in the operation, Kevin Medley, has agreed to pay $390,000, suspended except for $17,500 due to an inability to pay. Both managers are also barred from the debt collection business and are prohibited from misrepresenting any claim, including those related to debt relief, mortgage modification, and credit repair services. They are also barred from disclosing consumer information they may have obtained and are ordered to destroy it.

Further Reading

Final Judgment and Order for Permanent Injunction and Monetary Relief as to Defendant Kevin Medley: Federal Trade Commission v. Forensic Case Management Services Inc., et al. Filed March 14, 2012.

Final Judgment and Order for Permanent Injunction and Monetary Relief as to Defendant Frank E. Lindstrom, Jr.: Federal Trade Commission v. Forensic Case Management Services Inc., et al. Filed March 13, 2012.

Complaint for Preliminary and Permanent Injunction: Federal Trade Commission v. Forensic Case Management Services Inc., et al. Filed September 12, 2011.

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