Released: March 21, 2002

Commerce Commissioner revokes St. Cloud collection agency license
Owner barred from debt collection activities

(St. Paul) - Minnesota Commerce Commissioner Jim Bernstein announced today that the collection agency license of Associated Financial Services (AFS) of St. Cloud is revoked. In addition, the debt collector license of AFS owner-president, Patrick A. Kolling is also revoked. Kolling is barred from engaging in any licensed debt collection business in Minnesota.

The Department's ongoing investigation of AFS, and the Minnesota Attorney General's lawsuit filed in January, alleged multiple collection law violations that resulted in license revocation. The Attorney General's lawsuit is proceeding.

"License revocation is the last resort when considering enforcement action," said Commissioner Bernstein. "In this case, the egregious nature of the allegations made license revocation absolutely necessary to protect Minnesota consumers."

AFS allegedly harassed and mislead Minnesota consumers, falsified documents, and engaged in the unauthorized practice of law. The Department has received 19 consumer complaints against AFS. Allegations against AFS include:

• AFS and Kolling used profanity, obscenities, insults, repeated hang-ups, and other offensive conduct in an attempt to intimidate Minnesotans into paying debts.
• AFS demanded payment from parents or siblings of debtors without prior consent of the debtor.
• In its initial letter to debtors, AFS demanded immediate payment. The law requires a collection agency to notify debtors of their right to dispute any debt within thirty days of the letter and prohibits any confusing language.
• In its second letter, AFS falsely stated the matter had been referred to an attorney for "legal action" and the consumer would be responsible for related costs. In some instances, the accounts had never been assigned to AFS by the creditor for litigation and AFS had no authority to sue.
• AFS obtained a sham "assignment" of debts from creditors and agree to provide legal services including civil actions and garnishment proceedings. AFS then sued in its own name as "creditor" or "plaintiff." Because the accounts were not truly assigned, AFS misrepresented that it was the party of interest. The law also prohibits a collection agency from employing the services of a lawyer unless the creditor has expressly authorized the agency to do so.
• AFS garnished funds without notice to the debtor or garnished funds that were exempt under the law.

AFS was first licensed as a collection agency in 1987 and is located at 606 25th Ave. S, Suite 211, St. Cloud. AFS primarily collected medical and dental debts owed by Minnesota consumers.

The Minnesota Department of Commerce licenses and regulates collection agencies and debt collectors operating in the state. The Department also regulates insurance, real estate, residential building contractors, and other industries.

From 1/1/00 to date, the Minnesota Department of Commerce has taken 43 enforcement actions against collection agencies and debt collectors and collected $157,750 in civil penalties.

Consumers with complaints or questions about the conduct of collection agencies or debt collectors may call the Minnesota Department of Commerce Enforcement Division at (651) 296-2488 or toll free, 800-657-3602.