Allied Interstate, Inc., a Minnesota-based corporation with offices in the U.S., Canada, India, and the Philippines, will pay $1.75 million to settle FTC charges of repeated violations of both the Fair Debt Collection Practices Act and Section 5 of the Federal Trade Commission Act.
Allied's settlement marks the second-largest civil fine levied by the FTC against a debt collector.
"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."
According to the FTC's complaint, between 2006 and at least 2008, Allied Interstate persisted in debt collection efforts even after consumers told company representatives they didn't owe the debt in question. The company also failed to verify the accuracy of the disputed information. The FTC accused Allied of making harassing phone calls to consumers, using abusive language, calling many times a day for weeks or months, and sometimes hanging up when the calls were answered.
In addition, Allied repeatedly called third parties seeking to locate a consumer, revealed alleged debts to third parties without the consumers' consent or court permission, and threatened legal action against consumers it did never intend to take. Collectively, these practices violated both the Fair Debt Collection Practices Act and Section 5 of the Federal Trade Commission Act.
Besides the $1.75 million fine, Allied will be required to take specific steps whenever:
- A consumer disputes that he or she owes the debt or the amount of the debt.
- A reasonable person would consider the information on which Allied is relying to collect the debt to be implausible, unreliable or missing essential information.
The consent decree also 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.
- Violating the Fair Debt Collection Practices Act.