Student Debt Collector Was 'Abusive': MN Commerce Dept.

Minnesota Commerce Commissioner Mike Rothman announced that his agency and regulators in four other states have reached a $500,000 joint settlement with two subsidiariesof iQor Holdings Inc. for improper debt collection practices, including "making abusive and harassing phone calls to increase student loan payments," authorities said.

The settlement is the result of a multi-state market conduct examination of debt collection and financial practices at Allied Interstate, LLC, and The Receivable Management Services (RMS) Corporation. Allied Interstate collects student loan debt for the federal government and private financial institutions.

According to the allegations in the settlement agreement:

Allied Interstate violated federal and state consumer protection laws and its own compliance policies that limit contact with third parties or with consumers at their places of employment when it is not allowed.

Specifically, in order to meet revenue goals, Allied Interstate debt collectors were directed to call phone numbers that had previously been marked as “Do Not Call” and to document the accounts “REHAB PUSH” to avoid potential disciplinary action for violating consumer protection requirements and company policy.

For example, Allied Interstate debt collectors continued to call third parties who had previously said that the person they were trying to reach either did not live there or was unknown. They also called consumers at their places of employment after having already learned that the employers prohibited such calls.

Allied Interstate also engaged in unfair and deceptive practices by failing to promptly credit debtor accounts when it received checks as payment.

In addition, both Allied Interstate and RMS failed to provide timely, full access to all collection records and failed to submit complete responses to requested information in a timely manner, as required under state laws.

“Our investigation uncovered student loan debt collection practices that deliberately violated consumer protection laws to boost payments and meet revenue targets,” Rothman said in a statement.

“This settlement will ensure that the company changes how it does business so consumers are protected against abusive calls and other unfair treatment.”

The $500,000 settlement payment will be distributed equally among the five states participating in the investigation, according to a news release. In addition to Minnesota, they include Connecticut, Idaho, Massachusetts and North Dakota.

Under the terms of the multi-state agreement, in addition to the $500,000 settlement payment, the two companies have agreed to reform their debt collection, compliance and financial practices, according to authorities.

These reforms include maintaining an effective compliance management system and providing whistleblower training to ensure that all employees are empowered to report potential wrongdoing.

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Consumer Tips on Debt Collection

The Minnesota Commerce Department offers these basic tips for consumers on debt collection:

Get it in writing. If a debt collector calls you, insist that they send you a written notice. A collection agency must send you a written “validation notice” after first contacting you.

This notice must include how much money you owe, the name of the creditor and how to proceed if you don’t think you owe the money.

Don’t accept abuse or harassment. It is against the law for a debt collector to harass you, or anyone else, over the phone or through any other form of contact. They are not allowed to use obscene or insulting language, make threats or misrepresent who they are.

Don’t let a debt collector call you late at night or at work. A debt collector is not allowed to contact you before 8 a.m. or after 9 p.m. If you tell debt collectors that you are not allowed to receive their calls at work, then they must not contact you there.

Beware of fraudulent “debt relief” companies. They may promise to get rid of your debt or lower your payments, but they take illegal upfront fees while not delivering what they promised.

In Minnesota, a company that offers debt relief, debt negotiation or debt reduction must be licensed with the Minnesota Commerce Department and is not allowed to charge a fee until it fully performs the services outlined in a signed contract with the consumer.

File a complaint if you believe a debt collector has violated your rights. Agencies you may contact include:

• Minnesota Commerce Department, (651) 539-1600 or 800-657-3602 (Greater Minnesota)
• Federal Trade Commission, (877) 382-4357
• Consumer Financial Protection Bureau, (855) 411-2372

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