Debt collection mill Frederick J. Hanna & Associates faces major practice changes and a $3.1 million dollar civil penalty. On December 28, 2015, the Consumer Financial Protection Bureau (“CFPB”) filed a proposed consent order in federal court. If approved, Frederick J. Hanna & Associates (a Georgia-based law firm) and its three principal partners will be barred from further illegal debt collection practices. The CFPB charged Hanna with filing deceptive court papers and relying on faulty evidence to win debt collection lawsuits. Hanna would file suit and hope the consumer wouldn’t show up to defend the case. For a while, this was a winning strategy for collecting on old debts it couldn’t prove were owed.
“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.”
According to the CFPB complaint, Hanna filed more than 350,000 collection suits from 2009 through 2013 and relied on an automated system to churn out complaints. Some of the consumers Hanna sued didn’t owe the debt or had already received a bankruptcy discharge. Now, Hanna will be prohibited from filing or threatening lawsuits unless attorneys have reviewed specific documentation related to the consumer’s debt.
For more information, visit http://www.consumerfinance.gov/newsroom/cfpb-takes-action-to-stop-illegal-debt-collection-lawsuit-mill/.