Debt Collectors Punished for Making Death Threats
The Federal Trade Commission reached a settlement this month with two debt collectors who were accused of abusive and over-the-top practices, including threatening to rape a debtor’s mother, kill the family dog and desecrate the corpses of debtors’ dead children.
- Conduct of debt collectors governed by Fair Debt Collection Practices Act
- Abuses are widespread due to ignorance of law and difficulty of enforcement
- Know how to protect yourself from abusive collectors
Pay This Bill Right Now, or . . .
The FTC settlement agreement stipulates that Frank Lindstrom and Kevin Medley of Rumson, Bolling and Associates pay over a million dollars in penalties between them, and cease work in the debt collection industry.
The FTC complaint included an astounding list of abuses committed by the collectors, including “threatening physical harm and death to [alleged debtors] 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.”
The laws regarding what collectors can and can’t do to wring payment out of debtors are governed by the Fair Debt Collection Practices Act, and Lindstrom and Medley broke just about all of them. Along with a list of colorful and offensive names the defendants called the people they were trying to collect from, at one point they told one, “Are you going to pay this bill right now … or am I going to have to kill you?” Note that death threats are usually illegal even outside the realm of debt collection.
Unfortunately complaints against collectors like Lindstrom and Medley are far too common. The FTC registered 140,036 complaints about debt collectors in 2010, or 27 percent of all complaints taken, a big jump from 119,609 complaints in 2009. The agency produces a Fair Debt Collection report that contains a laundry list of the most common abuses by collectors:
- Harassing the alleged debtor or others
- Demanding a larger payment than is permitted by law
- Failing to send required consumer notice
- Threatening dire consequences if consumer fails to pay
- Failing to identify self as debt collector
- Revealing alleged debt to third parties
- Impermissible calls to consumer’s place of employment
- Failing to verify disputed debts
- Continuing to contact consumer after receiving “cease communication” notice
In general, collectors are not permitted to tell third parties about your debt, nor can they make untrue claims about potential consequences if you don’t pay up. Among other abuses, collectors can’t call before 8 a.m. or after 9 p.m., can’t call over and over and over again, can’t use abusive or profane language and can’t contact debtors who already have an attorney handling their case. Consumers may notify a collector in writing to cease contact and the collector is bound to respect the request (though the collector can still continue certain legal remedies to collect the debt).
Wild Wild West
Tough-guy collectors are an unenviable consequence of falling into debt. “It’s the wild wild west with those guys,” says Scott Dillon, a bankruptcy attorney at Tully Rinckey in New York. “It’s all a commission-based service industry. They have to be as aggressive as they can, and there are probably not too many controls as far as management is concerned. You’ve got monetary incentive to be as impressive as possible.”
Scare tactics can be effective when vulnerable and scared consumers aren’t familiar with the ins and outs of the law. “I can’t tell you how often my clients come in under the complete belief that if they don’t pay the debts, they’re going to jail,” Dillon says. “That is continuously a theme I see with debt collectors.”
Dillon says he also sees frequent cases where debtors’ family members and employers have been contacted, and instances where the collectors falsely threaten to take legal action or intercept money they have no claim to. “A lot of senior citizens are being told they’ll get sued and garnished for the rest of their lives,” the attorney says. “It’s completely untrue. Social Security is completely exempt from garnishment.” Most other federal benefits are also exempt.
An Hour of Your Life
Although enforcement can be difficult, consumers do have options to put a stop to around-the-clock phone calls, threats and other shady practices by aggressive collectors:
- Write a certified letter asking them to stop contacting you.
- Contact your state attorney general’s office or the FTC to lodge a complaint.
- Hire an attorney. You can sue the collectors if they are overly abusive, or file for bankruptcy if necessary to protect yourself. If nothing else, if you retain a lawyer the collectors are then bound to bother the attorney about the debt instead of you.
What’s more, bankruptcy attorneys usually offer free consultations. “What does it cost you? An hour of your life just to meet?” says Dillon. “Anyone who thinks they have their rights violated, talk to an attorney. You will know exactly what your rights are when you leave.”
Even for a veteran bankruptcy lawyer used to hearing about illegal acts by collectors, the sheer audacity and venom in the Lindstrom and Medley examples is surprising. “The death threats is a new one for me, to be honest,” Dillon says. “It seems to be beyond the pale.”