Summary: After being caught spitting out debt collection lawsuits with little to no evidence, a Georgia law firm has agreed to pay up.
Georgia-based Frederick J. Hanna & Associates has agreed to pay $3.1 million. The firm and its principal investors will settle the federal accusations with a hefty fee for operating a lawsuit mill.
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The Consumer Financial Protection Bureau sued the law firm that specializes in debt collection matters for using deceptive court filings and faulty evidence to achieve their lawsuits. The federal lawsuit alleges that they took advantage of the court processes to intimidate and coerce consumers into repaying debts that may not even be owed or in the very least verified.
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The law firm filed suits on behalf of their clients such as Discover, Capital One, JPMorgan Chase, and the Bank of America in the thousands. The complaint states, “To produce so many lawsuits, the Firm operates less like a law firm than a factory. It relies on an automated system and non-attorney support staff to determine which consumers to sue.”
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The non-attorney support staff at Hanna would then “produce the lawsuits and place them into mail buckets, which are then delivered to attorneys essentially waiting at the end of an assembly line.” The actual attorneys at Hanna only spent a minute or less “reviewing or approving each suit.” One attorney at the firm passed on over 130,000 debt collection lawsuits in two years, roughly 1,300 per week.
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The CFPB also found in their investigation into the law firm that not only was the firm misrepresenting who filed the lawsuits, they were using unsubstantiated evidence. Whenever the evidence was questioned, the lawsuit would be dropped. Between 2009 and 2014, they dropped 40,000 lawsuits for this reason in just Georgia or around 155 a week.
The settlement requires the law firm to pay $3.1 million to CFPB’s Civil Penalty Fund, clean up attorney practices, prohibit deceptive court filings, and end illegal collection and intimidation practices.
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