Debt relief firm that claimed ties to US government sued by CFPB

FDAA charged with operating allegedly illegal debt relief scheme targeting credit card debtors

Fred O. Williams
Senior Reporter
Expert on consumer credit laws and regulations

FDAA logo

The government’s consumer watchdog agency filed a lawsuit Oct. 12 seeking payback for victims of a Maryland-based debt relief scheme, known as FDAA, that targeted credit card debtors.

“FDAA and its owners lied to financially vulnerable consumers to line their pockets with cash,” Consumer Financial Protection Bureau Director Richard Cordray said in a statement.

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FINDING LEGITIMATE CREDIT COUNSELING

Looking for credit counseling?

  • Seek an accredited credit counseling agency.
    Start by making sure that the credit counseling agency you have contacted is a member of a national organization such as the National Federation for Credit Counseling or the Financial Counseling Association of America, and that has fulfilled state requirements for credit counseling.
  • Research the credit counseling agency. 
    Even if an agency is accredited, check its local record with the Better Business Bureau, state attorney general and local consumer protection groups that examine consumer complaints. A history of complaints should raise a red flag.
  • Carefully select your credit counselor.
    Learn more about how to pick a credit counselor.

The agency charged that FDAA pretended to be linked with the U.S. government, collected illegal upfront fees for debt relief, and misled customers about being able to extinguish debts.

The government’s lawsuit in U.S. District Court in Baltimore targets two companies that are known as FDAA – Federal Debt Assistance Association LLC and Financial Document Assistance Administration Inc. It also named company officials David and Vincent Piccione and Robert Pantoulis, and a company called Clear Solutions Inc. that shared the Baltimore address of the FDAA entities.

Companies selected victims with high card debt
The companies targeted credit card holders using 85 percent of their credit limit with debts of $30,000 or more, according to the CFPB’s lawsuit.

Using mailings with a seal like that of the U.S. government, FDAA referred to an “entitlement amount” for debtors, according to the court filing. The companies sought upfront payments of $12,000 or installment payments totaling up to $19,000. Debt relief companies are barred from charging fees before obtaining results.

Representatives of FDAA did not respond to messages left by phone and email requesting their comment on Oct. 12. A recorded message at FDAA’s number says its process is designed to “stop debt collection harassment and potential lawsuits by challenging collectors to prove the alleged debt is valid, verifiable and fully collectible.”

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                        False claims of debt relief
FDAA’s recorded message mentions laws including the U.S. Fair Debt Collection Practices Act that require collectors to verify a debt when asked. While that is true, “the FDAA companies falsely claimed to consumers that the money owed would be eliminated or reduced if the creditor did not respond to the FDAA companies’ satisfaction,” the CFPB’s news release said. The companies claimed to be able to reduce debts by at least 60 percent and improve credit scores within the first year.

The lawsuit seeks an unspecified amount of refunds for people who paid into the scheme; an injunction to halt the companies’ activities, and unspecified civil penalties. The CFPB charges violations of the U.S. Consumer Financial Protection Act and the Telemarketing Sales Rule of the Telemarketing and Consumer Fraud and Abuse Prevention Act.

According to the Better Business Bureau of Greater Maryland website, Federal Debt Assistance Association LLC was using the BBB torch symbol in employees’ email signatures although it was not accredited, in violation of BBB policy.

The pattern of complaints against the company included deceptive advertising, high-pressure sales tactics and high upfront fees, the BBB said.

Federal Debt Assistance Association LLC was incorporated on or about Jan. 14, 2016, at 11615 Crossroads Circle, Suite M, Baltimore, according to court papers. Financial Document Assistance Administration Inc. was incorporated on or about Feb. 23, 2017 at the same address.

See related: Federal civil penalty fund pays refunds to scam victims, 8 tips to picking a credit counselor


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Updated: 12-16-2017