| Two subsidiaries of IQor Holdings Inc. have agreed to pay $500,000 to agencies in five different states, including the Massachusetts Division of Banks, for unlawful debt collection practices.
The Connecticut Department of Banking, Idaho Department of Finance, Minnesota Department of Commerce and North Dakota Department of Financial Institutions were the other three agencies involved in the multistate investigation.
The lawsuit alleged that Allied Interstate LLC and The Receivable Management Services Corp., which owns the subsidiary Receivable Management Services – Recovery Division LLC, called phone numbers that had previously been marked as “Do Not Call,” and documented the accounts “REHAB PUSH” to avoid potential disciplinary action. These actions violated federal and state consumer protection requirements, including the Fair Debt Collection Practices Act.
“Massachusetts residents should take comfort knowing not only that they have rights against egregious debt collection practices, but also that the division of banks will not hesitate to use its authority to enforce consumer protection laws and regulations in this arena,” John Chapman, undersecretary for the Massachusetts Office of Consumer Affairs and Business Regulation, said in a statement. “This settlement is a clear indication that poor business practice and violations against consumers will not be tolerated in Massachusetts.”
Settlement documents show Allied Interstate engaged in unfair and deceptive practices by failing to promptly credit debtor accounts upon receipt of payment by check. Instead, court documents allege, Allied delayed credit, typically for a period of four to five days, until the check cleared. On interest bearing accounts, according to the settlement documents, this resulted in unearned interest accruing on consumer accounts, misrepresenting the actual date that a payment is received from a consumer debtor to its clients.
Settlement documents further show Allied made “multiple harassing telephone calls to the consumer,” specifically to harass, oppress or abuse the person about the collection of a debt. Allied also allegedly contacted consumers at their places of employment, in violation of state law and the company’s own internal compliance policies.
The exam review period covered collection activity over a two-year period between Feb. 11, 2013, and Feb. 27, 2015, and was done simultaneously with a targeted review of Allied’s federal student loan collection activity by the Consumer Financial Protection Bureau.
The $500,000 settlement will be divided among the five states and the two subsidiaries have agreed to reform their debt collection practices.
“This first of its kind multi-state settlement for improper debt collection practices highlights the collaborative nature of the state regulatory system. Division staff joined forces and resources with other regulators to examine a national debt collector to protect consumers in our home states,” Massachusetts Commissioner of Banks Terence McGinnis said in a statement. “This specific examination aimed to determine the companies’ compliance with applicable laws, the financial condition of the company and supervision controls of licensed debt collection activities. The violations discovered warranted the appropriately significant penalty.”
