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CFPB Files Consent Order Against Debt Collection Law Firm
On Monday, December 28, 2015, the CFPB filed a proposed consent order in federal court to settle its enforcement case against Frederick J. Hanna & Associates, a Georgia-based debt collection law firm. If agreed to by the court, this would close a contentious case where the defendant argued the Bureau lacks the authority to regulate the litigation activities of lawyers.
In its July 2014 complaint, the Bureau alleged Hanna & Associates violated Dodd-Frank’s unfair, deceptive or abusive acts or practices ban and the Fair Debt Collection Practices Act when it filed collection lawsuits without “meaningful involvement of attorneys,” as well as for filing affidavits concerning the underlying debt without sufficient evidentiary support. According to the proposed consent order, the defendant agrees to:
- Stop filing collection lawsuits or threatening to file lawsuits unless an attorney has reviewed specific documentation related to the consumer’s debt, including original account-level documentation containing, at minimum, the consumer’s name, the last four digits of the account number associated with the charge-off debt, the claimed amount excluding post charge-off payments, and the debt’s terms and conditions if the suit is based on a breach of contract theory;
- Stop using affidavits as evidence to collect debt unless the statements specifically and accurately describe the signer’s knowledge of the underlying facts and documents; and
- Pay a civil money penalty of $3.1 million.