Minnesota Commerce Commissioner Mike Rothman announced yesterday that a Texas-based debt collection company is facing a $500,000 penalty and a consent order that requires the company to change its ways, including rewriting its collection manual and retraining its employees. The financial penalty is the largest ever imposed on a debt collection agency by the Minnesota Commerce Department.
The company – Tucker, Albin and Associates, Inc., of Richardson, Texas (Tucker, Albin) – specializes in commercial debt collection, seeking to recover money owed or due by businesses. The company was licensed to operate as a collection agency in Minnesota.
The Commerce Department’s consent order detailed specific charges against Tucker, Albin. They include:
- The company wrote a collection manual and trained its collectors in practices that violated the federal Truth in Caller ID Act. The allegations are that collectors would “spoof” the phone numbers of victims’ family members or neighbors so these numbers would show up on caller ID instead of the company’s phone number in Texas.
- Collectors at the company would claim to be private investigators, threatening to take pictures of a victim’s business, run checks on vehicles in the parking lot and interview employees as they left the business. However, the company never hired any private investigators in Minnesota and none of its employees were licensed to work as private investigators in the state.
- Collectors at the company would contact nearby businesses and ask pointed questions about a victim’s business. In several cases, the victims were farmers and the company called local greenhouses and livestock auction houses. The Order alleges that these phone calls were intended to harass and intimidate.
- Collectors at the company would threaten actions they could not legally take. These false threats included freezing assets, having their insurance revoked and reporting the victims to the IRS or other government agencies. These threats were intended to intimidate and coerce the victims to make payments.
In the consent order Tucker, Albin agreed to the following settlement terms:
- The company will cease and desist from further violations of Minnesota laws.
- The company agrees to a civil penalty of $500,000, including $130,000 to be paid immediately and $10,000 to be paid each month for the next year. Payment of the remaining $250,000 will be stayed for two years, but must be paid in full immediately if the company violates the cease-and-desist order.
- Within 60 days, the company will review and rewrite all collector training materials, instructions, letters, emails and all other communications with debtors to comply with state and federal laws.
- The company will provide retraining to their collectors, managers and owners to prevent further violations, providing written proof of this retraining within 60 days.
- The company will implement a compliance training and monitoring program to prevent further violations and provide quarterly reports to the Commerce Department during the next year.
- The company will provide quarterly reports to the Commerce Department during the next year about all complaints it receives involving Minnesota debtors or creditors.
This is one of the types of stories that insideARM must report. While not flattering nor positive for the ARM industry, it is an important news story. What makes this case interesting is the fact that the company is primarily involved in COMMERCIAL collections as opposed to CONSUMER collections. The company engages in collection activity against small business, not individuals.
The Fair Debt Collection Practices Act (FDCPA) is designed to protect consumers. The Consumer Financial Protection Bureau (CFPB) is, by its very name, designed to protect consumers. But, as you can see from this case, there are other regulatory concerns.
In years past commercial collectors may have felt “immune” or “invincible” to regulatory actions. This case makes a strong statement to the contrary. Compliant, honest, ethical behavior must be the norm for the industry, regardless of size of an agency, type of accounts, or business segment.