Debt-Collection Firms’ Factory-Type Operations May Be Violation of FDCPA
The case claimed that Hanna’s attorneys were not “meaningfully involved” in the collection cases that they filed, operating “less like a law firm than a factory.” The case also claimed that the affidavits Hanna submitted in its debt-collection cases were often perjured, not based on the signers’ personal knowledge.
Under the Fair Debt Collection Practices Act, attorneys must be meaningfully involved in the cases they file. The FDCPA prohibits misrepresentations, and if an attorney signs a court document without having reviewed it, consumers may be misled as to the attorney’s actual involvement in the case.
The main allegations of the case are listed in a press release issued by the Consumer Financial Protection Bureau: CFPB Files Suit Against Debt Collection Lawsuit Mill.
What does this decision mean? Debt-collection firms typically operate on a mass scale, filing dozens or hundreds of lawsuits at once based on spreadsheets and mail merges, rather than careful drafting. So the debt-collection model may have a big problem because the mass-production appears to violate the Fair Debt Collection Practices Act.
Link to decision: Consumer Financial Protection Bureau v. Frederick Hanna & Associates