CFPB Sues Law Firm Behind Debt Collection Lawsuits

July 14, 2014
Washington Post 
debt settlement news
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Georgia-based Frederick J. Hanna & Associates, accusing it of using illegal tactics to intimidate consumers into paying questionable debts. The suit claims the law firm used sworn statements from people who could not possibly know the details of the consumer debts and, when challenged, dismissed more than 40,000 lawsuits it had filed in Georgia alone because it could not substantiate the claims.

Frederick J. Hanna & Associates was found to be cranking out debt collection lawsuits against consumers through an automated process, without any meaningful involvement of attorneys. It had filed tens of thousands of lawsuits against people who were behind on their bills, claiming that lawyers reviewed and signed off on the cases. Federal authorities, however, raised questions when they noticed the same name on 130,000 lawsuits over a two-year period. The firm has earned millions since 2009 from collecting debts on behalf of its clients, including banks, debt buyers, and credit card issuers.

“The Hanna firm relies on deception and faulty evidence to drag consumers to court and collect millions,” declared CFPB director Richard Cordray. “We believe they are taking advantage of consumers’ lack of legal expertise to intimidate them into paying debts they may not even owe.” He added that the CFPB is seeking compensation for victims, a civil fine, and an injunction against the company and its partners.

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