MN Collection Agency Pays $1.75M to Settle Charges

The settlement is the second-largest civil penalty ever received by the Federal Trade Commission in a debt collection case.

St. Louis Park-based debt collection agency Allied Interstate, Inc., will pay $1.75 million to settle federal charges, the Federal Trade Commission (FTC) announced Thursday.

The FTC alleges, among other things, that the company made repeat telephone calls to collect debt from a person who didn't owe anything and/or to collect the wrong amount.

The FTC said that the settlement is the second-largest civil penalty it has ever received in a debt collection case.

In its complaint, which was filed in U.S. District Court in Minnesota, the FTC accused Allied Interstate of attempting to collect debt even after consumers told the company that they didn't owe anything. Allied Interstate allegedly made these collection attempts from 2006 to at least 2008, and the company did not take steps to verify the accuracy of the consumers' complaints.

“Debt collectors had better make sure their information is accurate, or they could end up paying a big penalty,” David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a statement. “There is no excuse for trying to collect debt from someone if you can't confirm that they actually owe it.”

The FTC also accused the company of making “improper, harassing phone calls” to consumers-consisting of abusive language, multiple calls each day over the course of weeks or months, hanging up when calls were answered, and threatening legal action that it had no intentions to pursue.

Allied Interstate also made multiple calls to third parties in an attempt to locate a consumer, and it shared information about the consumer's alleged debt without receiving proper consent, the complaint alleges.

According to the FTC, these actions violated the Fair Debt Collection Practices Act and the Federal Trade Commission Act.

Allied Interstate did not admit to any wrongdoing or violation of law in its settlement, according to court documents.

Allied Interstate wrote in an e-mailed statement on Friday that the FTC's investigation focused primarily on one problem: repeat phone calls to wrong numbers. “We take seriously any call placed to a wrong number and regret the inconvenience caused to any consumer as a result of this,” the company wrote, adding that the problem is “an industry issue.” The company said that it has implemented a new calling system, and it has since seen “a dramatic reduction in complaints.”

The recent FTC allegations are not the first time that Allied Interstate has faced enforcement actions for its debt collection practices. According to Minnesota Commerce Department records, the company was fined a total of $43,000 between 2000 and 2002 for threatening a debtor with legal action that it didn't intend to take, among other violations.

Allied Interstate has offices in the United States, Canada, India, and the Phillipines, and the FTC refers to it as “one of the nation's largest debt collectors.”