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.
CFPB Enforcement Division Responds to Motion to Dismiss Filed by “Lawsuit Mill” Frederick J. Hanna & Associates
In July the CFPB sued Frederick J. Hanna & Associates, a Georgia law firm, for its debt collection practices (complaint here), calling the firm a “lawsuit mill.” Hanna & Associates filed a Motion to Dismiss (copy hosted by CFPB monitor) in September, and the CFPB’s response (copy hosted by Consumer Financial Services blog) elegantly explains what Hanna was doing wrong: