WASHINGTON – The Consumer Financial Protection Bureau is charging the law firm Frederick J. Hanna & Associates $3.1 million over allegations that it illegally filed debt collection lawsuits against consumers.
The CFPB's proposed order, filed Monday in federal court, accuses the Georgia-based firm and three of its partners of using "deceptive court filings and faulty evidence" to churn out debt collection lawsuits against consumers. The consent order, if approved by federal court, requires the firm and the named partners to pay a $3.1 million civil money penalty.
"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 in a press release. "Debt collectors that use the court system for purposes of intimidation should reconsider how their practices are harming consumers."
The firm's three partners who were cited in the consent order are Frederick Hanna, Joseph Cooling and Robert Winter.
The CFPB accused the firm of "intimidating" consumers by filing debt collection lawsuits that appeared like it was signed by an attorney when it was actually an automated process that involved the work of nonattorney staff.
"This process allowed the firm to generate and file hundreds of thousands of lawsuits," the CFPB said. "One attorney at the firm, for example, signed over 130,000 debt collection lawsuits over a two-year period."
The agency also accused the law firm of filing sworn statements from its clients who attested against a consumer with outstanding debt even though some of the clients could not have known such details.
"In a substantial number of cases, when challenged, the firm dismissed lawsuits," the CFPB said. "Between 2009 and 2014, the firm dismissed over 40,000 suits in Georgia alone, and the CFPB believes it did so frequently because it could not substantiate its allegations."
The proposed consent order would resolve the lawsuit against Hanna which the CFPB filed in July 2014. The defendants had filed a motion to dismiss the case but the court rejected the request in July 2015. The CFPB noted that the action is a part of a larger sweep to end wrongful debt collection practices, including both buyers and sellers.
"For instance, in separate enforcement actions, the CFPB has ordered three of the Hanna law firm's clients, JPMorgan Chase, Portfolio Recovery Associates, and Encore Capital Group, to overhaul their debt collection practices and to refund millions to harmed consumers," the CFPB said in a press release. "The bureau will continue working to ensure all players in the collections market treat consumers fairly."