Anne Bucher  |  July 23, 2014

Category: Consumer News

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debt collection lawsuitThe Consumer Financial Protection Bureau has sued a Georgia-based law firm, alleging it utilizes automated technology to file debt collection lawsuits against thousands of Georgia consumers.

The CFPB is a federal agency charged with regulating consumer-financial products and services under the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act of 2010 (CFPA). “Using high-volume litigation tactics, Defendants collect millions of dollars each year, often from consumers who may not actually owe debts or may not owe debts in the amounts claimed,” the CFPB alleges.

According to the CFPB lawsuit, which was filed Monday against Frederick J. Hanna & Associates and its three principal partners, the law firm filed hundreds of thousands of lawsuits on behalf of credit card issuers, debt buyers and other entities without confirming the alleged debtors actually owed any money. The CFPB lawsuit alleges the attorneys lacked meaningful involvement in the preparing and filing of the debt collection lawsuits, and that the firm relied on improperly executed affidavits in violation of the FDCPA.

The CFPB alleges that the majority of the work behind the debt collection lawsuits was performed by non-attorney support staff. These non-attorneys were allegedly tasked with the responsibility for determining whether consumers’ accounts were “suit worthy.”

“To produce so many lawsuits, the Firm operates less like a law firm than a factory,” the CFPB alleges. “It relies on an automated system and non-attorney support staff to determine which consumers to sue. … The Firm’s attorneys are expected to spend less than a minute reviewing and approving each suit.”

According to the CFPB, the debt collection lawsuits are signed with attorneys’ names, “despite those attorneys not being meaningfully involved in the decision to initiate the lawsuits or in the preparation of the pleadings.” Further, the debt collection lawsuits were often filed without investigating or verifying the facts. In most cases, the consumers either failed to appear in court and were subjected to default judgments, or they agreed to settle the debt collection lawsuits.

The CFPB lawsuit alleges that the law firm filed more than 350,000 debt collection suits in Georgia between 2009 and 2013. In 2009 and 2010, one attorney signed close to 85 percent of the debt collection lawsuits, signing an average of nearly 1,300 debt collection lawsuits per week.

The CFPB also alleges the law firm “routinely obtained and used affidavits” that represented they had “personal knowledge of the validity and ownership of debts,” even though they should have known that the affidavits were executed by people who did not actually possess personal knowledge about the facts.

The case is Consumer Financial Protection Bureau v. Frederick J. Hanna & Associates PC, et al., Case No. 1:14-cv-02211-AT-WEJ, in the U.S. District Court for the Northern District of Georgia, Atlanta Division.

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