CFPB

Frederick J. Hanna Associates To Pay $3.1 Million And Stop Filing Suits Without Proof

A proposed Consent Order has been filed in the CFPB’s enforcement action against Frederick J. Hanna Associates. This was the first enforcement action by the CFPB directly against a collection law firm and was the subject of a vigorous defense by Hanna and much comment in the trade press. Hanna lost its motion to dismiss in July 2015, made an unsuccessful motion for an interlocutory appeal and discovery was ordered to proceed.

The case attracted a lot of attention: from the Wall Street Journal to trade publication InsideARM which said that “[t]he case should be front and center for all law firms practicing in this space“. In light of the excitement about the case, the bottom line of the Consent Order is, rather disappointing: Hanna is to pay $3.1 million in penalties to the CFPB and agrees to injunctive relief(all without admitting any of the CFPB’s allegations). There is no relief for consumers targeted by Hanna – that is presumably left to private law suits.

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A Proposal to Ban Collecting on Time-Barred Debt

A new National Consumer Law Center (NCLC) report argues that the Consumer Financial Protection Bureau (CFPB) should use its power to ban the collection of statute-barred debts:

In light of the inherent unfairness, deceptiveness and abusiveness that occur when collectors pursue time-barred debt and the inability of disclosures to adequately protect consumers, the CFPB should ban all efforts to collect out-of-statute debt—whether by litigation or other means.

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Jeff Sovern’s Groundbreaking Study on Forced Arbitration Clauses: Consumers are Unaware and do not Understand Them

The Consumer Financial Protection Bureau has to make an important decision soon, about arbitration clauses. Forced arbitration clauses (or “mandatory pre-dispute arbitration clauses” as they are sometimes called) appear in many standard consumer contracts. If you have a Paypal account, a mobile phone contract, a credit card, an employment contract, or if you have purchased a car of other large consumer item, the chances are that all of these contracts have forced arbitration clauses in them. Most people don’t read consumer contracts very closely, and many if not most people have ever even heard of forced arbitraiton. But suppose that you gave 600 ordinary American consumers a typical contemporary consumer contract, asked them to read it and then gave them a quiz.  How would they do?

That is more or less what a major study by the St John’s University School of Law led by Professor Jeff Sovern did. It seeks to answer the question: do we understand forced arbitration clauses?

Read More »Jeff Sovern’s Groundbreaking Study on Forced Arbitration Clauses: Consumers are Unaware and do not Understand Them