FTC Settles Charges Against Collection Agency for $1.75 million

The Federal Trade Commission late Thursday announced a deal with Allied Interstate which will see the ARM company pay $1.75 million to settle charges that it made repeated telephone calls to collect from the wrong person. The FTC said it was the second-largest civil penalty obtained by the government agency in a debt collection case.

According to the FTC’s complaint, between 2006 and at least 2008, Allied Interstate, Inc., based in Minnesota and owned by BPO giant iQor, Inc., continued collection efforts even after consumers told the company they did not owe the debt, without verifying the accuracy of the disputed information.

“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.”

As a part of the consent decree with the FTC, Allied will be required to take specific steps when a consumer disputes the debt or when “a reasonable person would consider the information on which Allied is relying to collect the debt to be implausible, facially unreliable, or missing essential information.”

Allied Interstate agreed with FTC’s assessment that more should be done to prevent debt collection calls to the wrong party.

In a statement to insideARM.com, Allied said, “We take seriously any call placed to a wrong number and regret the inconvenience caused to any consumer as a result of this. We recognized this as an industry issue several years ago.  In 2006, we started designing statistical models to identify wrong numbers prospectively.  We also began work on a system which would use these statistics to focus calling activity on the best numbers, and to ensure that all calls comply with all federal, state and local rules at all times.

“This system was put into production several months ago, and is being implemented across our entire company.  We have already seen a dramatic reduction in complaints as a result of the new system.  The FTC has set a new standard for the industry. We are pleased that our new systems are fully in compliance with this standard.”

The FTC said in its press release that Allied allegedly engaged in other activity that constituted violations of the Fair Debt Collection Practices Act (FDCPA) such as third party disclosure and threatening to take legal action to collect when the firm had no intention of doing so.

But Allied noted that the FTC’s investigation focused on activity between 2006 and 2008 and that “while the FTC investigated many areas of activity, the consent decree focuses primarily on one problem — namely, repeat phone calls to wrong numbers.”