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CFPB sues debt collection law firm

By Jeanine Skowronski ·
Tuesday, July 15, 2014
Posted: 3 pm ET

The Consumer Financial Protection Bureau, or CFPB, clearly has its eye on the debt collection industry.

Less than a week after fining payday lender ACE Cash Express for illegal debt collection practices, the agency has filed a lawsuit against Frederick J. Hanna & Associates, and its three principal partners, alleging the firm "churns out hundreds of thousands of lawsuits that frequently rely on deceptive court filings and faulty or unsubstantiated evidence."

The CFPB's complaint, filed in a federal district court Monday, calls the Georgia-based firm a "factory." It alleges Frederick J. Hanna & Asso© zimmytws/Shutterstock.comciates violated the Fair Debt Collection Practices Act, or FDCPA, by intimidating consumers with collection suits that were signed by automated processes and/or non-attorney staff instead of attorneys.

The CFPB also alleges the firm used sworn statements from its clients in court filings "even though in some cases the signers could not possibly know the details they are attesting to." It believes the Hanna firm dismissed over 40,000 lawsuits in Georgia because it ultimately could not substantiate allegations.

"We believe they are taking advantage of consumers' lack of legal expertise to intimidate them into paying debts they may not even owe," said CFPB Director Richard Cordray in a press release.

Joseph C. Cooling, managing partner at Frederick J. Hanna & Associates, denied the CFPB's allegations and "overall mischaracterization of our firm as a 'mill' or 'factory'" in an email.

"Hanna has completely cooperated with the CFPB over the last year," he wrote. "We were completely surprised and obviously disappointed by yesterday's events. At all times, our firm has faithfully followed the long-established legal rules and due process guidelines set forth under Georgia law and the long line of established federal judicial precedent with regard to the Fair Debt Collection Practices Act."

The CFPB is seeking compensation for victims, a civil fine and an injunction against the company and its partners as a result of the suit.

While the debt collection process can certainly be daunting for consumers, FDCPA does provide them with certain rights. For instance, in an effort to collect on the debts, third-parties can't falsely claim to be an attorney or a law enforcement official or threaten to sue unless they actually plan to take legal action. You can learn more about your debt collection rights here.

Follow me on Twitter: @JeanineSko.

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July 20, 2014 at 3:25 pm

There should be more Violators mentioned here that the CFPB needs to be made aware of - companies ABUSING their power over Borrowers.
My recent experience:
My credit history - pay on time and either in full or 5 - 10 times the minimum payment due.
Paid a balance in FULL - on time. Rec'd a bill for a penny. Sent an actual penny - they do not accept coin but kept it. Sent a check for a penny. There was disagreement IF the penny was actually owed AND why I should pay .02 cents.
I received a call from them the sum total is I am not financially responsible; I received an ACT91 notice to foreclose on my home; they advised I need CREDIT Counseling; they reported to three major credit companies I do not pay my bills on time; which caused a Major store to CANCEL my account. This company THEN sent someone to my Home to take photos of my Home without my approval or knowledge.
I wonder what they do to people that owe money?

July 20, 2014 at 1:15 pm

Instead of consumers' 'lack of expertise' how about using 'consumers' abundance of stupidity'? Pleading stupid is the time-honored way of avoid paying one's debts. And now the illegal aliens can just say 'non comprende'. Disgusting.