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US consumer bureau sues debt-collection law firm

Published on NewsOK Modified: July 14, 2014 at 6:31 pm •  Published: July 14, 2014
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WASHINGTON (AP) — The Consumer Financial Protection Bureau sued a major debt collection law firm on Monday, alleging it is a "mill" that produces shoddy, mass-produced credit-card collection lawsuits.

The bureau's claim, filed in federal court in Atlanta, states that Frederick J. Hanna & Associates has filed hundreds of thousands of lawsuits on behalf of banks including JPMorgan Chase, Bank of America, Capital One and Discover without doing even basic checks to determine whether the people they sued actually owed debts.

"The Hanna firm relies on deception and faulty evidence to drag consumers to court and collect millions," the bureau's director, Richard Cordray, said in a statement. "We believe they are taking advantage of consumers' lack of legal expertise to intimidate them into paying debts they may not even owe."

Though Hanna & Associates' lawsuits have all the trappings of formal litigation, the bureau alleges, the firm is really a bulk debt-collection agency masquerading as a law firm. Hanna & Associates attorneys were told not to spend more than one minute reviewing most cases before they were filed, the bureau claims, and in Georgia, one Hanna & Associates attorney signed off on 138,000 lawsuits over two years, a pace that the bureau declared incompatible with legitimate legal work.

The bureau's suit seeks to force Hanna & Associates and its owners to change its collection practices, pay restitution to consumers and disgorge "ill-gotten revenues."

In response to the suit, the law firm issued a statement declaring that "we strongly deny the allegations of the complaint and, moreover, the overall characterization of our law firm." Hanna "completely cooperated" with the bureau's investigation, the firm said, "and we are obviously disappointed by today's events."

The bureau's suit may signal additional actions against credit card collections law firms, which file millions of lawsuits a year. Consumer advocates and plaintiff's attorneys have long alleged that the debt collection industry is rife with misconduct.

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