Continued: Lawsuit accuses collector of harassment over invalid debts

Minnesota Attorney General Lori Swanson Monday sued an Illinois debt-collection agency for attempting to collect invalid debts from Minnesotans.

"This debt collector crossed the line by pursuing debt people said they didn't owe and failing to verify that they did owe it," Swanson said. The office received more than 50 complaints about AFNI Inc., a collection agency in Bloomington, Ill., that's been in business for 70 years.

Swanson said she's seeing an uptick in the number of debt-collection complaints as the economy falters. Indeed, complaints about collection agencies are on the rise nationwide: The Better Business Bureau reports that it received more than 18,000 complaints in 2007, up 26 percent compared to 2006. The agency's Minnesota and North Dakota branch saw 29 percent more complaints in 2007, for a total of 798.

The lawsuit, filed in Hennepin County District Court, alleges that in addition to not verifying debts, AFNI collectors would "badger Minnesota citizens into paying debts that they do not owe, improperly reported illegitimate debts to credit bureaus, and refused to take steps to remove the debts from Minnesota citizens' credit reports," violating state and federal collection laws.

AFNI, a member of the Edina-based collections industry trade group ACA International, said it had not seen the lawsuit and declined to comment.

Megan Simonson of Minneapolis had difficulty buying a home because of a blemished credit report due to a debt she did not owe, according to a sworn affidavit. A victim of identity theft, she tried countless times to resolve the matter with AFNI and failed. At one point she resigned herself to paying half of the debt in order to close on her home purchase, but changed her mind when the company told her payment would be an admission of guilt.

"In addition to having one AFNI agent lie to me and attempt to defraud me, AFNI simply would not act to address my concerns and resolve the problem with the false debt in time for me to close on my house," she stated.

The complaint also said some debts that AFNI attempted to collect were as much as a decade old. And proving that the debts weren't theirs fell on the shoulders of the consumers, not the agency, according to the suit. The term "zombie debt" has been coined for old debt that's hard to verify and won't go away.

Ken Gooden received a letter from AFNI regarding a 10-year-old charge of $6,122 for a phone he never had in a state he never called home. The Plymouth senior is so in tune with his credit that he and his wife have an ongoing contest to see who has the highest credit score. He disputed the charge, but instead of sending him verification, AFNI sought his Social Security number and other private details.

"I thought I was the victim of a phishing expedition," he said.

Gooden said he figures he's spent 100 hours working to resolve the dispute and the "mental hangover" from the incident still lingers.

Kara McGuire • 612-673-7293

Recent Local + Metro stories

Oprah Winfrey's mother, Wis. fashion retailer settle bill dispute; terms not disclosed - July 15, 2008

Oprah Winfrey's mother, Wis. fashion retailer settle bill dispute; terms not disclosed - A financial dispute between Oprah Winfrey's mother and a high-end fashion store in Wisconsin has been settled. More