CFPB sues 'debt collection lawsuit mill'

The Consumer Financial Protection Bureau filed a lawsuit against a Georgia company it called a “debt collection lawsuit mill.”

The watchdog claimed Monday that the firm, Frederick J. Hanna & Associates, spooks consumers with deceptive court filings and shoddy evidence to “intimidate” them into paying debts they do not actually owe.

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

The CFPB said the firm has filed hundreds of thousands of lawsuits on behalf of clients like banks, debt buyers, and credit card issuers. This assembly-line approach led to over 350,000 lawsuits between 2009 and 2013 in Georgia alone.

The regulator also claimed that the firm often filed suits signed by attorneys that were not actually crafted by lawyers, but rather automatically created by non-attorney staff. To bolster this claim, the CFPB pointed out that one attorney had signed off on over 130,000 lawsuits over a two-year stretch.

The CFPB also argued that the firm frequently made claims in lawsuits that could not be backed up by evidence, using sworn statements from clients that could not be substantiated. Since 2009, the firm dismissed over 40,000 lawsuits in Georgia, and the regulator said it was because the firm could not substantiate its claims.

In the suit, which the CFPB also filed against the firm’s three principal partners, the regulator is asking the court to penalize the company, and also provide compensation to harmed consumers.