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Commerce Department working to keep convicted felons out of your wallet

February 17, 2012

For Immediate Release

ST. PAUL, MN – The Minnesota Department of Commerce continued its efforts this week to keep convicted felons out of the pocketbooks of Minnesota consumers. Commissioner Mike Rothman took action against 49 debt collection agencies nationwide that are owned and operated by NCO Financial Systems, Inc. According to the Department’s investigation, the company allegedly failed to properly screen employees and employed known felons. In a consent order signed Thursday, Commissioner Rothman ordered NCO Financial Systems, Inc. to overhaul its employee screening process and pay $250,000 in civil penalties to the State of Minnesota.

“Turning loose convicted felons on vulnerable Minnesota consumers is a dangerous recipe for fraud and financial abuse,” said Commissioner Rothman. “That is why our investigators are thoroughly examining the hiring practices of debt collection agencies doing business in Minnesota. Employing convicted criminals to collect sensitive personal information from financially stressed consumers is against the law – and it cannot be tolerated.”

The consent order signed by the Commissioner and NCO Financial Systems, Inc. includes allegations that the company:

  1. Failed to establish adequate procedures to follow when screening individual debt collector applicants prior to submitting applications to the Commissioner for registration;

  2. Failed to properly screen numerous individual debt collector registrations prior to submitting their initial and/or renewal registrations to the Commissioner;

  3. Employed individuals as debt collectors who were known to, or should have been known to have criminal backgrounds that included felonies; and

  4. Failed to notify the Department when its registered debt collectors were fired for reasons that were in whole or in part violations of state law, including alleged Fair Debt Collection Practices Act (FDCPA) violations such as: a) third party disclosure; b) vulgar language; c) calling and swearing at debtors; d) failing background checks; and e) other harassing behavior.

In addition to these alleged violations, a collection management team member also allegedly stole company funds from a debt collector incentive program.

“These allegations represent a fundamental breakdown in the internal systems and protocols meant to safeguard Minnesota consumers from predatory wrongdoing,” said Rothman. “Collection agencies must abide by the law so that the rights of Minnesota consumers are protected.”

Based on the allegations listed above, NCO Financial Systems, Inc. has complied with the following as ordered by the Commissioner:

  • Established practices, procedures, and/or guidelines that include a screening process to ensure that the company does not submit debt collector registration applications to the Commissioner for individuals prohibited by state law to act as debt collectors;

  • Submitted its screening process to the Commissioner for review and made such changes to the screening process as the Commissioner deemed necessary;

  • Subjected all currently employed and registered debt collectors in the Mendota Heights office to the screening process to ensure compliance with state law and reported to the Commissioner any registered collectors whose employment was terminated for not being eligible for registration;

  • Audited employee records of terminated employees during the last five years to determine if any were terminated for reasons in whole or in part based on a violation of state law; and

  • Established auditing procedures and agency policies to ensure that criminal convictions of its debt collectors are promptly reviewed and acted upon.

The Commissioner has further ordered that NCO Financial Systems, Inc.:

  • Cease and desist from any violations of state debt collection laws;

  • Report to the Commissioner any and all rejected debt collector registrations and the reasons for the rejections on a quarterly basis during a two-year period;

  • Report to the Commissioner any debt collector terminations that occur as a result of their new screening process;

  • Pay any and all reasonable travel expenses for Department personnel and their designees to verify the company’s compliance with state law;

  • Provide a copy of the referenced consent order to all states, cities, or other governing bodies where the company is licensed for debt collections; and

  • Pay the state a civil penalty of $250,000.

This enforcement action announced today is part of a larger effort to clean up the debt collection industry in Minnesota. Last October, Commissioner Rothman announced formal action against nine other collection agencies for alleged wrongdoing, including six companies that allegedly employed convicted felons as debt collectors. More information about those actions can be found here.


In light of these developments, Commissioner Rothman encourages Minnesota consumers to know their rights and protect themselves from identity theft. The Department of Commerce offers these helpful tips to help Minnesotans avoid becoming victims of debt collection scams:

  • Call us first. Do not send money to a “debt collector” you think may be perpetrating a fraud – call the Department of Commerce to see if the person is, in fact, a licensed debt collector.

  • Protect your identity. Do not give away or verify any of your personal financial information.

  • Protect your money. Ask your bank to put an “alert” on your account (often these scammers have a consumer’s bank account information before they begin harassing them).

  • Avoid phony calls. Be wary if the debt cannot be verified or if no documentation is received. At that point, ask the callers to stop contacting you and register with the National Do Not Call Registry at or 888-382-1222.

  • Contest errors. If no debt is confirmed, contact any involved parties to clear up inaccuracies on your credit report, such as: the debt collector; the creditor or company claiming unresolved accounts; and the major credit bureaus. Write a detailed letter and include supporting documents to prove your case. The Federal Trade Commission provides additional resources for reporting errors.

  • Know your rights. Review the federal Fair Debt Collection Practices Act (FDCPA), which sets standards for collection agencies and prohibits abusive tactics. The FDCPA is enforced by the FTC and violations should be reported. Know that debt collectors: a) may not make false or deceptive claims; b) are not allowed to make idle threats, express or implied, or use abusive or profane language; c) should not discuss consumers' accounts with unauthorized third parties; d) may not inaccurately report credit information or pressure consumers to pay debts they do not owe; and e) must investigate the validity of a dispute over a debt.

The Minnesota Department of Commerce Consumer Help Line can be reached by phone at (651) 296-2488 or (800) 657-3602. Complaints can also be sent by email to or by mail to Minnesota Department of Commerce, 85 7th Place East, Suite 500, Saint Paul, MN 55101.