The Wall Street Journal recently released a story that the U.S. Consumer Financial Protection Bureau, or CFPD, is taking aim at a large debt collection law firm. The CFPD is a segment of the Executive Branch of the US government who is charged with enforcing federal consumer financial laws. The recent law suit filed by the Bureau against Georgia based law practice Frederick J. Hanna & Associates is the first of its kind filed against a debt-collection firm.
The lawsuit alleges that the firm violated consumer protection laws by failing to properly review the validity of debt it was trying to collect. The firm has filed more than 350,000 credit card collection complaints against consumers, many of those in small claims court. The CFPD claims that on average only about 1 minute of attorney time was spent reviewing the complaints before they were filed. The suit further alleges that many claims showed incorrect amounts, were lacking in documentary evidence, and that often multiple cases were filed against the same person for the same debt.
I have consulted with many people facing these cookie cutter law suits. They really are a headache, as I think the lawsuit points out. It’s difficult to impossible to get these law firms to discuss the matter on the phone, and good luck getting them to provide you documentary evidence to verify the debt outside of court. These firms who do mass debt collection just don’t seem to operate with the same level of commitment as they should. One effect of the way these lawsuits are handled is that people are pushed into bankruptcy when they otherwise wouldn’t be. This happens both because of the sure frustration of dealing with these firms and out of being obligated on debt they really shouldn’t be.