Debt collectors with government contracts paid penalties
WASHINGTON — Two private debt collection companies that work for the Education Department paid more than $4 million combined in civil penalties in the past year after another federal agency accused them of using abusive language with consumers, making illegal threats and committing other violations of the law.
One of the firms, West Asset Management Inc., agreed in March to pay $2.8 million, a sum the Federal Trade Commission said was the largest civil penalty it had ever obtained in a debt collection case.
The second, Allied Interstate Inc., agreed in October 2010 to pay $1.75 million.
Education Department officials were aware of the enforcement actions at the time, and said — without providing any substantiation — that none of its borrowers had been impacted. It is unclear what impact, if any, the cases had on the firms' contracts to recover funds from holders of delinquent student loans.
"We closely monitor government contractors to ensure they are working in the best interests of