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10/27/2010
caused to any consumer as a result of this," said Robert Burke, a vice president at iQor Inc., the New York-based parent company of Allied. "...We have already seen a dramatic reduction in complaints as a result of the new system." Allied, based in St. Louis Park, has 11 other offices in the United States, Canada, India and the Philippines, court papers say. In Minnesota, it has 442 licensed debt collectors. The state Commerce Department fined the company three times from 2000 to 2002 for violating state law, including attempting to collect on a debt after getting written notice to stop and threatening a consumer with action it did not intend to take. The fines totaled $43,000. The department has received 85 consumer complaints against Allied Interstate since 2004, among the most of any collection agency operating in Minnesota. Consumer advocates applauded the FTC action. "The fine levied for this relentless abuse of consumers is tiny compared to the profits this agency made over the years engaging in that abuse," said Peter Barry, a Minneapolis consumer attorney. "This lawsuit should send a strong signal to every debt collector in America: business as usual is over." Sen. Al Franken, D-Minn., who introduced legislation last month to curb abusive collection practices, including the use of arrest warrants, said the fine "should serve as a reminder to other debt collection agencies that they have to follow the law. "Still, we need to pass legislation that will update the law to make certain it addresses the wide range of abusive practices used by debt collection agencies to ensure that Minnesota's consumers are better protected against harassment," Franken said in a statement. FTC officials said the action against Allied reflects a strategic shift in enforcement. About three years ago, the agency began to focus on larger debt collectors engaged in illegal practices. By cracking down on the big players, the agency hopes to influence smaller debt collectors who engage in the same behavior. Even so, enforcement actions against debt collectors are rare. The FTC has brought just 11 cases against collection firms in the past five years, and 21 in the past decade -- a fraction of the complaints. Last year, the FTC received 88,190 complaints about third-party debt collectors, up from 78,925 a year earlier. Nearly half of the complaints involved allegations that collectors harassed people by calling repeatedly, the FTC said in an annual report to Congress. "The FTC doesn't have a huge amount of resources, so any time they do take action, it's a big deal," said Robert Hobbs, deputy director of the National Consumer Law Center in Boston. "They focus on the really bad culprits." Allied also has been the target of numerous private lawsuits by consumers. Ten cases
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have been filed in federal court in Minnesota since December 2008, when the FTC completed its investigation. Wallace Milow of Zumbrota, Minn., alleged in a lawsuit last year that Allied collectors called him repeatedly demanding he pay his son's $10,000 credit card debt. When Milow refused, Allied allegedly threatened to have his son arrested with bail set at $12,000. Milow alleged that Allied kept calling him even after he told the firm that he could not pay his son's debt and asked Allied to stop contacting him. Milow, whose lawsuit was settled without a trial, said he couldn't speak about it because of a confidentiality provision. Chris Serres 612-673-4308
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