CFPB Pursues Georgia Firm for “Cookie-Cutter” Debt Collection Lawsuits

Imagine having paid-off a debt only to receive a legal notice years down the line insisting you owe more money.

That’s what happened to Eduardo Austin of Atlanta, GA, who paid off a $2,400 credit card bill only to discover that Frederick J. Hanna & Associates – a law firm based out of Marietta, Georgia – was trying to garnish another $970 in interest charges. And he’s not the only one.

The law firm is said to have sent out over 350,000 credit card collection complaints against consumers in a large volume, including claims against individuals who – in actuality – may not owe anything at all.

In response, the US Consumer Financial Protection Bureau (CFPB) recently filed its first lawsuit against the firm, stating that Frederick J. Hanna & Associates is in violation of federal consumer-protection laws, including the Fair Debt Collection Practices Act (FDCPA). Although the legal team at Frederick J. Hanna & Associates claims they aren’t in violation of any credit law, it stands to reason that they very well could be.

According to the Fair Debt Collection Practices Act, a collection agency may not collect any amount greater than what is expressly authorized by the agreement in which the debt was created. Likewise, many of the individuals involved in this situation are unfamiliar with credit law and neglect to contest the claim in court, leaving very little for the judge to work with when verifying the claims of debt-collection firms.

Currently, Austin is involved in a federal lawsuit seeking class-action status against the firm, claiming extra interest was added to debts that had already been paid in full. Likewise, the CFPB is aiming to create regulations that would enforce stronger restrictions on debt collectors, requiring them to prove that they have the right to collect on a debt, ensuring the amount in question is correct.

Contrary to the CFPB’s claims, the managing partner at Frederick J. Hanna & Associates notes that the firm’s actions – including those taken against Eduardo Austin – were “permissible under state law” and “resulted from a backlog of debt-collection cases in the court system.”

If you’re in a situation where you’re being pressured by a debt collector – or even a lawyer – regarding an old or paid-off debt, put a stop to collection calls and seek qualified legal counsel to review your case.

Debt collectors in violation of the Fair Debt Collection Practices Act are committing a crime, and in many instances leverage the law illegally to pressure you into payment, even when a debt has already been settled and squared away. This is a violation of your rights. Don’t let the same thing happen to you without consulting an attorney of your own – it’s 100% free, so you have nothing to lose.