The Consumer Financial Protection Bureau (CFPB) filed a lawsuit
against a debt collection law firm, Frederick J. Hanna & Associates
(Frederick Hanna). The suit alleges that
the debt collection firm spent less than a minute reviewing each of the credit
card collection cases. More than 350,000
cases were filed by the law firm, and many of the individuals targeted owed
nothing or less than the amounts claimed.
Individuals targeted in similar suits as those filed by Frederick Hanna,
often do not appear for the court cases.
As a result, many cases end in a default judgment, which can be
difficult to correct, allowing the debt collector to garnish wages or put a
lien on property.
The lawsuit filed by CFPB indicates that CFPB may be looking
into other debt collection law firms, where claims are out of date, have
incorrect amounts, and do not include the necessary documentation to back up
the claims.