Second Largest Debt Collection Civil Penalty in FTC History – and New Compliance Resource for Business

The FTC’s recent settlement with Allied Interstate, one of the nation’s largest debt collectors, sends a timely reminder to industry members to comply with the law – and an important message to consumers that the FTC has their back when it comes to companies that cross the line.

According to the FTC, when consumers told Allied Interstate they didn’t owe the debt, the company continued collection efforts without verifying the accuracy of the disputed information.  The FTC also charged that the company made improper harassing phone calls to consumers, used abusive language, and called many times a day for weeks or months, sometimes hanging up when the calls were answered.  In addition, the FTC alleged that Allied made repeat calls to third parties seeking to locate consumers, revealed alleged debts to third parties without the consumers’ consent or court permission, and threatened consumers with legal action the company didn’t intend to take – all in violation of the Fair Debt Collection Practices Act and the FTC Act.

Allied Interstate agreed to a $1.75 million civil penalty, the second largest won by the FTC in a debt collection case.  In addition, the settlement outlines specific steps the company has to take if consumers dispute that they owe the debt or the amount of the debt, or if the information the company claims to rely on is implausible, facially unreliable, or missing essential information.  In either case, Allied must either close the account and end collection efforts or suspend collection until it’s conducted a reasonable investigation and verified that the info is accurate and complete.  Furthermore, if Allied can’t substantiate that the consumer owes the debt, it can’t sell the debt or provide it to any business other than the client it came from.

The consent decree also bars Allied from illegal practices like using obscene language, harassing consumers with repeated phone calls, communicating with third parties about a consumer’s debt without the consumer’s consent or court permission, or making false statements in connection with collecting a debt.

If you’re in the debt collection industry, the complaint in the Allied Interstate case is an object lesson in illegal practices to avoid.  This new video from the FTC offers practical tips on complying with the Fair Debt Collection Practices Act.

Know someone who’s dealing with debt?  Debt Collection FAQs: A Guide for Consumers explains their rights and responsibilities under the law.  In addition, the FTC's Money Matters site offers practical advice for people behind on their bills.