One firm’s attack on cash-strapped borrowers may be coming to an end. In an effort to better protect consumers from unethical debt collection practices, the Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Frederick J. Hanna & Associates.
Frederick J. Hanna & Associates is a Georgia-based firm that was founded in 1981. The firm focuses on creditors’ rights and recoveries. Among its high-profile clients are Bank of America, JP Morgan Chase, Capital One and Discover. CFPB alleges that the firm acted as a “lawsuit factory” that churned out lawsuits against consumers with little regard for its victims. Between 2009 and 2010, the firm filed almost 140,000 lawsuits. Hanna & Associates operated with a 16-lawyer skeleton crew, but the majority of the work was conducted by automated processes and non-attorney staff.
The law firm’s president and two managing partners were named in the complaint. CFPB is asking the court to fine the firm and to compensate the victims. In addition, CFPB requests that an injunction be granted against the firm and the partners, which would prevent Hanna & Associates from continuing to do business. Susan Shin of the New Economy Project has stated that the practices of this firm are not unique. According to Shin, many collection firms are guilty of the same abusive practices.
Affected consumers will be notified of settlements in this matter. Kansas consumers who are being victimized by overly aggressive creditors may have another option. Those drowning in credit card debt may consider filing for bankruptcy, which can stop creditor harassment.
Source: Huffington Post, “Debt Collection ‘Factory’ Preyed on Broke Americans: Lawsuit,” Hunter Stuart, July 15, 2014