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Minnesota debt collection agencies found operating out of trust

Oct 17, 2013 Philip Burgess

The Minnesota Department of Commerce is going after local debt collection agencies that it claims are violating the law and clients' trust, according to a recent report by insideARM. The state investigated accounts receivable management (ARM) businesses Receivables Management Solutions, Inc. (RMS) and Wentworth Assets, LLC, eventually discovering that the former company had run on a zero or below-zero balance in their trust account as many as 40 times in a six-month span. This shocking revelation was met by skepticism and frustration by the owner of both of the aforementioned companies, Robert Dunham. Dunham claims that the Department of Commerce is misrepresenting the facts of the case and falsely accusing him of breaking the law.

The legislation in question is Minnesota's requirement that collection agencies create a distinct trust for client-collected money, to avoid businesses using these funds for daily operating expenses. The Minnesota Department alleges that RMS put all its money in one fund and furthermore used it for personal expenses.

Betrayal of trust
If Dunham is indeed found guilty of these charges, debt collectors can learn a valuable lesson from his misdoings. Dunham and RMS have been accused of creating false checks from clients to be able to fund payroll, as well as depositing post-dated checks before the check date, placing customers in a miserable situation. Actions such as these are clearly ill-advised and only alienate potential clients further. Even if Dunham is not indicted in a court of law, the damage done to his companies' reputations may prevent consumers from trusting in his product.

Debt collection is already a tricky business, as many people turn to larger agencies to help solve financial difficulties, which demands a high level of trust between all participants. Actions such as Dunham's undermine the credibility of the industry as a whole and are largely preventable, provided debt collection agencies have a thorough understanding of the laws of the state they're operating in.