Magazine article American Banker

Lawsuits Target Debt Collection 'Mill', Loan Forgiveness Scheme

Magazine article American Banker

Lawsuits Target Debt Collection 'Mill', Loan Forgiveness Scheme

Article excerpt

Byline: Kristin Broughton

Federal and state authorities on Monday sought to rein in three companies accused of exploiting consumers struggling to pay off their debts.

The Consumer Financial Protection Bureau filed a federal lawsuit against the Georgia-based law firm Frederick J. Hanna & Associates and its three principal partners, accusing the firm of running an illegal "debt collection lawsuit mill."

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

But a statement by the firm said it was "disappointed" by the bureau's action and it denied all wrongdoing.

"Our law firm takes great pride in its commitment to compliance with all consumer protection laws and state civil procedure and evidentiary laws," said Joseph C. Cooling, a managing partner for the firm, said in an email to American Banker. "At all times, our firm has faithfully followed the long established legal rules and guidelines set forth under Georgia civil procedure and as established by federal judicial precedent with regard to the Fair Debt Collection Practices Act.

At issue in the lawsuit is the automated process the firm allegedly uses to file debt-collection suits. The CFPB alleged that the firm used "high-volume litigation tactics" to collect debts for banks and credit card issuers, including JPMorgan Chase (JPM), Bank of America (BAC), Capital One (COF) and Discover (DFS). …

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