Debt Collection Law Firms Facing Tougher Regulations from CFPB
Aug. 15, 2014
An article on the Wall Street Journal‘s Law Blog details how the CFPB is cracking down on debt collection law firms that are violating federal consumer protection laws.
The CFPB recently sued Georgia-based debt collection firm, Frederick J. Hanna & Associates, who the CFPB claims contacted hundreds of thousands of consumers who either did not owe any debt, or owed less than the firm specified.
The CFPB reports that, on average, high-volume law firms spend less than a minute on debt collection cases, which can lead to misinformation and unjust accusations.
Hanna and Associates reportedly handled over 350,000 cases last year, many of which violated consumer protection laws regulated by the CFPB. Experts believe the CFPB is targeting such firms that are acting as debt collection businesses rather than law firms.
The lawsuit against Hanna and Associates could lead to stricter regulations in terms of the accuracy of debt collection reports in an attempt to hold debt collection law firms accountable. As the WSJ article details, very often the accused will not even show up in court, which “as a result, many cases end in a default judgment allowing the collector to garnish wages, freeze bank accounts or put a lien on property”.
Read the full report on the Wall Street Journal’s website.