CFPB files order against debt-collection lawsuit mill

December 29, 2015

WASHINGTON (12/29/15)--The Consumer Financial Protection Bureau (CFPB) filed a proposed consent order to resolve a lawsuit against a Georgia-based law firm for allegedly operating an illegal debt-collection lawsuit mill.

The consent order, filed in the U.S. District Court for the Northern District of Georgia, would resolve a July 2014 lawsuit against Frederick J. Hanna & Associates and its three principal partners. The order, if approved, would also require the firm and its principals to pay $3.1 million to the bureau’s civil penalty fund.

The CFPB lawsuit alleged that the defendants relied on deceptive court filings and faulty evidence to churn out lawsuits. The order, if approved by the court, would bar the firm and its principal partners from illegal debt-collection practices, such as filing lawsuits without being able to verify whether the consumers’ debt is owed, and intimidating consumers with deceptive court filings.

“The Hanna firm relied on deception and faulty evidence to coerce consumers into paying debts that often could not be verified or may not be owed,” said CFPB Director Richard Cordray. “Debt collectors that use the court system for purposes of intimidation should reconsider how their practices are harming consumers.”

In its complaint, the CFPB charged the law firm with violating the Dodd-Frank Act and the Fair Debt Collection Practices Act by intimidating consumers with deceptive court filings and introducing faulty or unsubstantiated evidence.

The CFPB’s proposed order, if approved by the court, would end illegal collection and intimidation tactics; clean up attorney practices; prohibit deceptive court filings; and require payment of a $3.1 million penalty.

In separate enforcement actions, the CFPB has ordered three of the Hanna law firm’s clients-- JPMorgan Chase, Portfolio Recovery Associates and Encore Capital Group--to overhaul their debt collection practices and to refund millions to harmed consumers.