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LAWSUITS NEWS & LEGAL INFORMATION

CFPB Files Claim against Debt Collection Lawsuit Mill

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Washington, DCWith consumers and officials fighting back against debt collector harassment, it's no wonder that there seems to be news every day about another debt collector lawsuit. Many lawsuits allege bill collector harassment of consumers, including calling at unreasonable hours and making repeated phone calls. A new lawsuit filed by the Consumer Financial Protection Bureau (CFPB) alleges that one debt collection firm actually acts as a debt collection lawsuit mill.

According to a news release from CFPB, a Georgia-based debt collection firm, Frederick J. Hanna & Associates, was in fact a debt collection lawsuit mill. The CFBP alleges the firm and its three principal partners used “illegal tactics to intimidate consumers into paying debts they may not owe.”

The Bureau alleges that the firm churned out hundreds of thousands of lawsuits and used deceptive court filings and faulty evidence to obtain judgments in its favor.

“To produce so many lawsuits, the Firm operates less like a law firm than a factory,” court documents state. “It relies on an automated system and non-attorney support staff to determine which consumers to sue. The non-attorney support staff produces the lawsuits and places them into mail buckets, which are then delivered to attorneys essentially waiting at the end of an assembly line. The Firm’s attorneys are expected to spend less than a minute reviewing and approving each suit.”

In its lawsuit, the CFPB alleges that Hanna & Associates collected millions of dollars each year, but those collections may have come from consumers who either did not owe the debts or did not owe the amounts claimed. Among the companies that Hanna & Associates collected debts for, according to the lawsuit, were JP Morgan Chase, Bank of America and Capital One.

To make its money, the firm allegedly filed more than 350,000 collection suits in a four-year period from 2009 to 2013. One attorney reportedly signed an average of 1,300 collection lawsuits a week over a two-year period. In some cases, the debt collection lawsuits were dismissed, but the CFPB argues that consumers who retained an attorney to help them were approximately four times more likely to have their cases dismissed than those who did not seek attorney help.

In some cases, according to the lawsuit, the debt buyers did not even have the original contracts for the alleged debts or a chain of title showing that there were grounds for a lawsuit.

Among the allegations made by the CFPB are that the firm misrepresented that the lawsuits were coming from attorneys when the attorneys had limited involvement in the process, and using unsubstantiated evidence to support lawsuits against consumers.

The lawsuit is case number 1:14-cv-02211-AT-WEJ, filed in the US District Court for the Northern District of Georgia Atlanta Division.

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READER COMMENTS

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I live in il. and in 2008 I went into a lease to own program. with a manufactured home establishment called tri star estates. in Bourbonnais il. after two years in the home. the park had raised the lot rent several times making it hard to keep up with all the and also costs associated with the lease. we were never aware that once we singed lease to own papers. there after the lot rent went up in two years from $199 to $600. which we would have to pay including the lease payment on the mobile home. making our payment over $1300 a month for a mobile home. along with gas, electric ,sewer, water ,pet and garage. then the tri star company decides to have a collection company do their collecting for them. the company named PMH collections. they harassed me along with several other people in the park with by calling several times a day calling my work and my wife's work several times a week. even after we told them to stop the harassment. up until we could take no more pressure and we returned the possession of the mobile home over to the park. which was also legal to do per the sales agent . who told us we could return possession of the home with out it affecting our credit . PMH has caused devastating affects to our credit scores. buy putting amounts owed several times and as if we were buying the mobile home not leasing it. after a couple of years . the residents who were harassed by PMH. put in for a class action suite against the tri star owner. causing him to claim bankruptcy and sell the property. i tried to have the credit companies remove them and all history from our files with no success.

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