They are wrong. Let's see, all other registrar's let it expire but they send it collections? Hmmm. Nothing more than a scare tactic. I'm sure some pay out of fear.
1AND1 does indeed send to collections.
1AND1 REQUIRES you to cancel their service (before expiration date), or they will bill you as an auto-renewal.
Auto-renewals are illegal in Ontario (Canada), so they can pee up a rope there. But other provinces or states may allow it.