CFPB Files Claim Against Debt Collection Lawsuit Mill

Many consumers and officials are now fighting back against the harassment of debt collectors. There are numerous lawsuits alleging bill collector harassment of consumers, including calling at unreasonable hours of the day and calling repeatedly. The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit alleging that one debt collection firm actually acts as a debt collection “lawsuit mill.”

In a news release from CFPB, a Georgia-based debt collection firm, Frederick J. Hanna & Associates, actually was a debt collection lawsuit mill. The CFPB alleges the firm and its three principal partners used “illegal tactics to intimidate consumers into paying debts they may not owe.”

The Bureau alleges that the firm operates like a factory, “churning out” hundreds of thousands of lawsuits using deceptive court filings to obtain judgments in its favor. The CFPB is seeking compensation for victims, a civil fine, and an injunction against the company and its partners.

“The Hanna firm relies on deceptive and faulty evidence to drag consumers to court and collect millions,” the bureau’s director, Richard Cordray, said in a statement. “We believe they are taking advantage of consumers’ lack of legal expertise to intimidate them into paying debts they may not even owe.”

“To produce so many lawsuits, the Firm operates less like a law firm than a factory,” court documents state. “It relies on an automated system and non-attorney support staff to determine which consumers to sue. The non-attorney support staff produces the lawsuits and places 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.”

According to the lawsuit, the CFPB alleges that Hanna & Associates collected millions of dollars each year, but those collections may have come from consumers who either did not owe the debts or did not owe the amounts claimed. Among the companies for which Hanna & Associates collected debts, according to the lawsuit, were JP Morgan Chase, Bank of America and Capital One, and Discover.

To make its money, the firm allegedly filed more than 350,000 collection suits from 2009 to 2013. One attorney reportedly signed about 1,300 collection lawsuits each week over a two-year period. In some cases, the debt collection lawsuits were dismissed, but the CFPB argues that consumers who retained an attorney to help them were, on average, four times more likely to have their cases dismissed than those who did not seek attorney help.

In some cases, according to the lawsuit, the debt buyers did not even have the original contracts for the alleged debts or a chain of title to show that there even were grounds for a lawsuit. The bureau claimed the firm never even bothered to conduct basic checks to determine whether the people they sued actually owed the debts.

Among the allegations made by the CFPB are that the firm misrepresented that the lawsuits were coming from attorneys when the attorneys had very limited involvement in the process, using unsubstantiated evidence to support lawsuits against consumers.

The CFPB alleges that the defendants violated the Fair Debt Collection Practices (FDCPA). Among other things, the FDCPA prohibits making misrepresentations to consumers, and specifically prohibits misrepresenting to a consumer that a communication is from an attorney.

Don’t let collectors harass or intimidate you into paying debts you may not owe. If you are a victim of collection harassment, you may be entitled to compensation for your abuse. For more information, contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

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