Allied Interstate Inc., a large collection agency based in St. Louis Park, Minn., will pay $1.75 million to settle federal allegations that employees repeatedly tried to collect debts from the wrong person, the Federal Trade Commission announced Thursday.
The penalty is the second largest civil fine obtained by the FTC against a collection agency. The largest settlement involved Academy Collection Service Inc.,
According to the FTC's complaint, between 2006 and 2008 Allied continued collection efforts even after consumers told the company they did not owe the debt. The company repeatedly did not verify the accuracy of the disputed information.
The company also allegedly made improper harassing phone calls to consumers, using abusive language or calling many times a day for weeks or months, sometimes hanging up when the calls were answered. The complaint also charges that Allied made repeated calls to third parties seeking to locate a consumer, revealing alleged debts to those parties without the consumers’ consent or court permission - then threatened legal action against consumers it did not intend to take. The complaint alleges that these practices violated the Fair Debt Collection Practices Act (FDCPA) and Section 5 of the Federal Trade Commission Act.
“Debt collectors had better make sure their information is accurate, or they could end up paying a big penalty,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection, in a statement. “There is no excuse for trying to collect debt from someone if you can’t confirm that they actually owe it.”
Along with the monetary penalty, Allied agreed to other measures, mostly already required by law.
When a consumer disputes a debt or the amount of a debt, Allied must either close the account and end collection efforts or suspend collection until it has investigated the dispute and verified that its information about the debt is accurate. If Allied cannot substantiate that the consumer owes the debt, the company cannot sell the debt or provide it to any business other than the client from which it obtained the debt.
The consent decree also officially bars Allied from:
* Making false statements to collect a debt or obtain information about a consumer;
* Making claims that a debt is owed or about the amount without a reasonable basis;
* Asking a third party for a consumer’s location information more than once without that third party’s consent or a reasonable belief that the person’s earlier response was wrong or incomplete and that the person now has correct location information;
* Communicating with third parties about a consumer’s debt without the consumer’s consent or court permission;
* Using obscene or profane language or harassing consumers with repeated phone calls;
* Making any other false or misleading statement in collecting a debt, including threatening action it does not intend to take; and
* Violating the FDCPA.
Allied works out of offices in the United States, Canada, India, and the Philippines. New York-based iQor Inc. is Allied's parent company.
