The Consumer Financial Protection Bureau (CFPB) is suing Frederick J. Hanna & Associates, a Georgia-based law firm that specializes in suits against consumers who have outstanding debts owed to banks, debt buyers, and credit card companies.
The suit, filed earlier this week in the Atlanta Division of Georgia’s Northern District, says the firm
“…operates less like a law firm than a factory. It relies on an automated system and non-attorney support staff to determine which consumers to sue. The non-attorney support staff produce the lawsuits and place them into mail buckets, which are then delivered to attorneys essentially waiting at the end of an assembly line. The firm’s attorneys are expected to spend less than a minute reviewing and approving each suit.
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 suit states that Hanna & Associates, since 2009 “have collected or attempted to collect debts for credit-card issuers such as JP Morgan Chase, Bank of America, Capital One, and Discover, and debt buyers such as Portfolio Recovery Associates and Midland Funding, LLC. The alleged debts were incurred by consumers primarily for personal, family, or household purposes.”
The CFPB says that the firm sued about 78,000 consumers in 2009; 84,000 in 2010; 71,000 in 2011; 57,000 in 2012; and around 60,000 in 2014 for a total of more than 350,000 suits in just five years.
The fact that Hannah & Associates only had anywhere from eight to 16 attorneys on staff at any given time shows that the firm was delegating the decision of whether or not a client was “suit worthy” to its non-attorney support staff and automated system, according to the suit.
This means that the firm’s “Georgia Collection Suits bore the names and signatures (or, in some cases, purported signatures) of attorneys, despite those attorneys not being meaningfully involved in the decision to initiate the lawsuits or in the preparation of the pleadings,” and that the firm’s “attorneys did not exercise independent professional judgment in determining whether to file the Georgia Collection Suits or what remedies to seek.”
The CFPB also says that the firm filed most of its suits on behalf of debt buyers, who often did not have documents to support their suing of consumers.
Hanna & Associates deny the allegations brought against them by the CFPB.
“Our law firm takes great pride in its commitment to compliance with all consumer protection laws and takes great pains every day to ensure compliance with state civil procedure and evidentiary laws, step by step,” said the firm’s Managing Partner Joseph C. Cooling in a statement.
This suit is just the latest attempt to reign in the the rampant corruption and dishonesty in the debt collection market. The Federal Trade Commission has been taking legal action against the payday loan industry, which offers short-term, high interest loans, often with interest rates of 300 percent or more. The Center for Responsible Lending, along with nearly 30 other consumer protection and civil rights group, has also called for stronger federal regulation against these illegal loans.