Georgia Debt Settlement Class Action Defeated

David Brian Weinberg

Case Conclusion Date:May 1, 2011

Practice Area:Class Action

Outcome:Plaintiff's voluntary dismissal

Description:I secured a significant victory on behalf of a long-time client in defense of a class action lawsuit alleging the client violated the Georgia Debt Adjustment Act (O.C.G.A § 18-5-1, et. seq.). Superior Court Judge Linda Warren Hunter, entered an Order enforcing an arbitration provision in the debt settlement consumer's agreement. Despite the complaining parties' reliance on several prior court decisions refusing to enforce almost identical arbitration provisions, I adapted recent developments in national and state arbitration law to secure the win. In response to the order compelling arbitration, the plaintiff dismissed his case and did not file an arbitration. "We are most pleased with the Court's well-reasoned ruling in this matter. The law is clearly on our side on this one and was expertly articulated by Rich and David," said in-house counsel for my client. Debt Settlement companies have been under attack since Georgia revised its laws in 2003 to provide consumers the ability to obtain the return of all fees, charges or contributions paid by the consumer plus a $5,000.00 penalty if they can prove a violation of the law. Georgia's Debt Adjustment Act is one of the strictest in the nation, providing a cap on the fees debt settlement companies can charge and requiring trust funds, annual audits, state reporting and liability insurance. Plaintiff's attorneys have seized on the statute's rigid requirements and hefty statutory penalty and continue to file aggressive class actions at a relentless pace. Any company providing debt settlement, debt management or debt negotiation services, including companies providing support services, such as payment processing and account management, should consult with legal counsel to ensure they comply with Georgia's strict laws. Likewise, service agreements should be well crafted to protect settlement and servicing companies in the event they are sued.