Today’s AJC reports that Marietta collection law firm Frederick Hanna & Associates has been sued by the Governors’ Office of Consumer Affairs following multiple complaints about collection tactics used by the firm. In November, the state consumer office served an investigative demand notice (i.e. a subpoena) on Mr. Hanna’s law firm asking for documents about the firm’s collection practices. Hanna contends that because his office is a law firm the state agency has no right to this information.
Among the complaints leveled against Hanna along with other high volume collection firms (Hanna opens 50,000 new files a month!) is that they engage in collection of s0-called “zombie debt,” accounts purchased by collectors for pennies on the dollar because it is old – so old that the statute of limitations has run and the debt buyer has no legal right to sue.
Other complaints filed by consumers often arise from identity theft cases in which a claim arising from fraudulent charges is sold and resold, eventually ending up in the hands of a debt buyer who files a lawsuit. Often the cost and complexity of defending the lawsuit can exceed the amount claimed, or the consumer fails to respond, resulting in a default judgment.
A hearing on the consumer affairs agency’s demand is scheduled for March 30, 2009 in Cobb County Superior Court. If the Governors’ Office is successful, collection firms will find it more difficult to avoid disclosure about collection tactics and processes – we will report back on the results of this hearing.