Can collection agencies charge interest?

I got a letter this January i mail stating that I owe some debt. I had some doubts regarding the amount so I asked for a validation. Couple weeks ago I got a letter stating that If I didn't pay the loan amount within a certain date, I would accumulate a 10% per day charge annum until and unless the debt is paid off. Can they do that? I never agreed to pay interest on this debt. I want to pay it off but curious if this charge is going to build up when it can't.
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