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CFPB Targets Georgia Law Firm

The Consumer Financial Protection Bureau (CFPB) continued its aggressive enforcement of consumer protection laws on Monday by filing a lawsuit against Georgia based debt collection law firm Frederick J. Hanna & Associates, for violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Fair Debt Collections Practices Act.

The Bureau, which refers to the firm as a “debt collection lawsuit mill” leveled accusations that the firm has churned out hundreds of thousands of lawsuits based on unsubstantiated evidence where, in some cases, the debt may not actually be owed.

“The Hanna firm relies on deception and faulty evidence to drag consumers to court and collect millions,” said 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. Today we are taking action to put a stop to these illegal debt collection practices.”

According to the complaint, the Hanna firm filed over 350,000 lawsuits in a four year period ranging from 2009 to 2013. The firm was able to generate the mountain of suits through the use of an automated process and work from non-attorney staff. In essence, the attorneys were only responsible for signing their name on the suit.

Further, the firm is accused of filing sworn statements with the court where the person making the statement could not possibly have had knowledge of the facts that he was swearing to.

The firm issued a statement in response to the complaint asserting that "we strongly deny the allegations of the complaint and, moreover, the overall characterization of our law firm. Hanna completely cooperated with the bureau's investigation, the firm said, "and we are obviously disappointed by today's events."

The suit is the latest in a series of enforcement actions by the CFPB which could pave the way for default servicing firms to be subject to more scrutiny by the bureau.

About Author: Derek Templeton

Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.

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