District Court Hears Debt Collector’s Motion to Dismiss in CFPB v Hanna

On Wednesday, June 3, 2015 oral arguments were heard on Defendants’ Motion to Dismiss in the case of Consumer Financial Protection Bureau (“CFPB”) v. Frederick J. Hanna & Associates, P.C. (“Defendants”) in the United States District Court for the Northern District of Georgia, before the Honorable Judge Amy Totenberg.

CFPB v. Frederick J. Hannah & Associates, P.C.
The CFPB initially brought the case in July 2014 against Hanna & Associates due to their high volume of debt collection suits against Georgia consumers who allegedly owed money to credit-card issuers. According to the suit, the attorneys of this firm typically spend less than one minute reviewing each consumer case before filing an action in court, which inevitably led to many Georgia consumers being sued for debts they may not have owed or for  which creditors’ had insufficient documentation.

According to the CFPB’s Complaint, from 2009 to 2013, Hanna & Associates filed more than 350,000 collection suits against Georgia consumers. During those years, the firm only staffed somewhere between 8 to 16 attorneys, with most of the work done by automated systems and paralegals.  The Complaint states that, in 2009 and 2010, the firm directed one attorney to sign about 138,000 lawsuits, an average of 1,300 collection suits per week. Thus, the CFPB brought this suit alleging the Defendants’ practice of filing suits against Georgia consumers  violated the Fair Debt Collection Practices Act (“FDCPA”) and the Consumer Financial Protection Act of 2010 (“CFPA”).

Motion to Dismiss
The oral arguments heard on Wednesday were based on Defendants’ Motion to Dismiss the case. In their brief, Defendants asserted several grounds for which the case should be dismissed, but the oral arguments seemed to focus on three key issues.

1) Does the practice of law exclusion in the CFPA bar the CFPB from enforcing this federal consumer protection law against the Defendants?

2)  Does the “meaningful attorney involvement” standard, which arises out of cases that permit FDCPA enforcement against attorneys engaged in the mailing of mass debt collection letters, apply here, where Defendants’ have engaged in the mass filing debt collection lawsuits?

3) Does the FDCPA’s one-year statute of limitations apply, thus barring CFPBs’ attempt to regulate Defendants’ conduct prior to 2013?

Judge Totenberg will issue a decision on Defendants’ Motion to Dismiss, thus determining whether the case will proceed. Georgia Watch will continue to monitor this important case and report on the outcome.  The mass filing of debt collection lawsuits against consumers often results in default judgments that have serious consequences for consumers’ credit and financial stability.  Since the CFPA is a relatively new statute, cases like this that interpret the law and determine the enforcement powers of the CFPB are critically important to watch.

Georgia Consumer Rights Regarding Debt Collection
In 2014, the Federal Trade Commission reported that the number one complaint of Georgia consumers was around debt collection. So what can consumers do to protect themselves from bad actors in the debt collection market?

  • If consumers feel as though their rights have been violated by a debt collector, consumers may file a complaint against the debt collector.
    • Consumers should file complaints to the Governor’s Office of Consumer Protection at 1-800-869-1123 (if the debt collector is not an attorney).
    • Consumers should also file a complaint with the Federal Trade commission at ftc.gov, via phone at 1-877-FTC-HELP, or by mail at:

Consumer Response Center
Federal Trade Commission
Washington, DC 20580-0001

  • If consumers would like to file a complaint against a debt collector that is an attorney, the complaint should be reported to the State Bar Association at 404-527-8700.