COLLECTION AGENCY FINED $1.75 MILLION

The U.S. Federal Trade Commission, a consumer protection body, has hit a collection agency with a $1.75-million penalty for extensive wrongful and unlawful collection practices.

Numerous complaints about Allied Interstate - with offices in Canada, the United States and parts of Asia - prompted the FTC to launch an investigation.

It found that Allied not only harassed debtors but tried to collect money from people who didn’t owe the debts they were being chased for and collected the wrong amounts.

“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. “There is no excuse for trying to collect debt from someone if you can’t confirm that they actually owe it.”

The harassment involved abusive language, threats and repeated daily calls. These efforts would continue even after the collectors were told the debts weren’t owed by those they were calling. Allied did not make any effort to investigate or verify disputed information.

It didn’t end there. Allied collectors threatened legal action with no intention of carrying through with such action. They also made repeated calls to third parties and discussed alleged debts with third parties.

Such practices are legislatively prohibited throughout both Canada and the United States.

The trade commission determined that Allied Interstate had repeatedly violated the U.S. Fair Debt Collection Practices Act as well as Section 5 of the U.S. Federal Trade Commission Act.
Additionally, the FTC decision also prohibits Allied collectors from making false statements in order to collect a debt or obtain information about a consumer, from using profane and obscene language, from lying in order to try to collect, and from harassing consumers with repeated calls.
The ruling further compels Allied to take specific steps to address a debt which a consumer disputes and to ensure that the information being relied upon to collect a debt is plausible, reliable and includes essential information before proceeding further with collection. And should such an investigation fail to determine the information is completely accurate then Allied must then close the account and stop collection efforts.
The decision further prohibits Allied from:

  • Making false statements in order to collect a debt or obtain any information about a consumer.
  • Making claims that a debt is owed or its amount without a reasonable basis.
  • Asking a third party for a consumer’s location more than once without that third party’s consent or the reasonable belief that the third party’s earlier response was wrong and/or incomplete and that the third party now knows the correct location.
  • Communicating with any third party about a consumer’s debt without the consumer’s consent or court permission.
  • Harassing consumers with repeated telephone calls.
  • Using obscene and/or profane language.
  • Making any other false, misleading and/or illegal statement in collecting a debt, including threatening action it does not intend to take.
  • Violating the Fair Debt Collection Practices Act.

Brian Pybus, CDA
October 2010

 

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