A debt collection “Factory” is being sued by a federal agency over its alleged misleading, deceptive and illegal practices as federal regulators crack down on the ballooning business of collecting debts from cash-strapped debtors.
The billion-dollar industry has ballooned in size over the past two decades and is under fire for filing wrongful lawsuits against vulnerable borrowers.
The Consumer Financial Protection Bureau (CFPB) announced on Monday that it had sued Frederick J. Hanna & Associates, a Georgia-based law firm that sues consumers for old, outstanding debts owed to banks, debt buyers and credit card companies.
The complaint against Hanna & Associates alleges that the firm operated as a lawsuit “factory,” cranking out more than 350,000 suits in Georgia alone since 2009. What’s more, the company operates with a skeleton staff of eight to 16 lawyers who merely put their signature on lawsuits, while the bulk of the work at the firm is performed by “automated processes” and non-attorney staff, according to the CFPB complaint.
In 2009 and 2010, the suit claims, a single lawyer at the company signed off on about 138,000 lawsuits, an average of about 1,300 a week. Such a feat would seem to test the limits of physical endurance. The firm’s lawyers were expected to spend “less than a minute” looking at each lawsuit before signing it, the suit contends.
The CFPB complaint names the law firm’s president, Frederick Hanna, and two of the company’s managing partners. It is asking for the firm to be fined, for its victims to be compensated, and for an injunction against the company and its partners.
The website for Hanna & Associates, which was founded in 1981, describes the company as a law firm dedicated exclusively to “creditors’ rights and recoveries.” Although the agency also has offices in Florida and Missouri, CFPB spokesperson Moira Vahey told HuffPost the agency’s lawsuit focuses on the firm’s alleged activity in Georgia.