A U.S. district judge gave the go-ahead to a federal regulator’s lawsuit alleging that a Marietta law firm runs a debt collection lawsuit factory that has intimidated thousands of people into paying debts they didn’t owe.
The law firm, Frederick J. Hanna and Associates, has been hit with scores of lawsuits and complaints over the years. They claim the firm often flouts federal and state consumer protection laws when collecting old debts.
The Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis, filed its suit last year. The CFPB alleges the law firm has violated consumer protection laws by churning out poorly researched lawsuits against people who have sometimes already paid the debts or don’t legally owe them.
In a 70-page order, U.S. District Judge Amy Totenberg ruled Tuesday that the agency’s lawsuit can go ahead. The Atlanta judge rejected the argument of the Hanna firm’s lawyer, former Georgia Attorney General Mike Bowers, that the CFPB’s lawsuit should be dismissed because the federal agency can’t regulate lawyers’ practices.
The so-called “practice of law” exclusion reserves authority for malpractice enforcement against lawyers to states’ supreme courts and state lawyers’ bars.
The ruling hands an early victory to the CFPB, which said Hanna filed so many lawsuits against consumers that its lawyers couldn’t have verified facts or had any meaningful involvement before the cases were filed.
The Hanna firm collected millions of dollars a year, the agency said, by filing more than 350,000 lawsuits in Georgia alone from 2009 to 2013, even though it had no more than 16 attorneys at the time. One lawyer filed more than 138,000 lawsuits in two years. Many of the firm’s 400 employees work in call centers trying to collect old debts, the agency said.
The Hanna firm has said it strongly denies the CFPB’s allegations and had cooperated with the agency during its investigation.
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