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To resolve �鶹��ý Trade Commission charges, one of the nation’s largest debt collectors will pay $1.75 million for allegedly making repeated telephone calls to collect from the wrong person, to collect the wrong amount, or both. The settlement is the second largest civil penalty obtained by the FTC in a debt collection case.

“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.”

According to the FTC’s complaint, between 2006 and at least 2008, Allied Interstate, Inc. continued collection efforts even after consumers told the company they did not owe the debt, without verifying the accuracy of the disputed information. Allied is a Minnesota corporation that works out of offices in the United States, Canada, India, and the Philippines. The company also allegedly made improper harassing phone calls to consumers, using abusive language or calling many times a day for weeks or months, sometimes hanging up when the calls were answered. In addition, the complaint charges that Allied made repeat calls to 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 not intend to take. The complaint alleges that these practices violated the Fair Debt Collection Practices Act and Section 5 of the �鶹��ý Trade Commission Act.

In addition to the monetary penalty, the proposed consent decree requires Allied to take specific steps whenever (1) a consumer disputes that he or she owes the debt or the amount of the debt, or (2) 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. In either circumstance, Allied must either close the account and end collection efforts or suspend collection until it has conducted a reasonable investigation and verified that its information about the debt is accurate and complete. If Allied cannot substantiate that the consumer owes the debt, the company cannot sell the debt or provide it to any business other than the client from which it obtained the debt.

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; and
• Violating the Fair Debt Collection Practices Act.

The Commission vote to authorize staff to refer the complaint and the consent decree to the Department of Justice for filing was 5-0. The documents were filed in the U.S. District Court for the District of Minnesota.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe”
that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. Consent decrees are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent decrees are subject to court approval and have the force of law when signed by the judge.

The �鶹��ý Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.