NEW YORK (AP) — The Federal Trade Commission said Thursday that several debt collectors have been banned from the business for abusive practices, including berating consumers, telling their neighbors about their debts and even threatening to dig up the bodies of relatives if they did not repay funeral bills.
The FTC said David M. Hynes II and Lorena Quiroz-Hynes agreed to the permanent ban as part of a settlement that also includes a series of businesses connected to Hynes. The FTC agreed to accept a payment of $700,000 on what was a $33.8 million assessment, saying the accused cannot pay the full amount.
The collection operation was based in Van Nuys, Calif., but the FTC says they worked with small businesses around the country.
There was no listed phone number for Hynes and Quiroz-Hynes in Van Nuys, and a message left with a lawyer who has represented them was not immediately returned.
The agency said the defendants had deceived small businesses who had hired them to collect debts and threatened those who owed money. At least two people who owed money to funeral homes were told the bodies of their children would be disinterred if the bills were not paid, the agency said. One was told that her daughter's body would be dug up and hanged from a tree. She was also told her dog would be shot and eaten if she didn't pay up. Other defendants were threatened with violence or were told they could be arrested.
The FTC said the defendants kept more money than they were entitled to from small businesses that had hired them, sometimes keeping all of it and bilking clients for fictitious legal expenses.
The agency said that the defendants often took money from consumers but didn't send it to their clients, meaning their debts were going unpaid.
The FTC complaint also says the defendants sometimes told the employers, co-workers, and neighbors of consumers about their debts, threatened that the debtors would be sued or arrested and told them their property would be seized or their wages garnished. They used obscene and profane language and harassing phone calls, the agency said.
The agency said it received an additional $400,000 from other companies Hynes controlled. Those businesses did not participate in the abuse or fraud, but they benefited from it financially.
Two other defendants, Heather True and James Hynes, agreed to smaller payments to the FTC that were also suspended because of inability to pay.
The FTC obtained a temporary restraining order against the businesses in September 2011, saying they had violated the FTC Act and the Fair Debt Collection Practices Act. Other defendants had already reached settlement agreements.
The new settlements end the FTC's proceedings, but they do not constitute an admission the defendants broke the law.