CFPB Settles Enforcement Action with Georgia Law Firm: Continued Oversight over the Practice of Law Expected

Joann Needleman

The two year legal battle between the Consumer Financial Protection Bureau (“CFPB”) and the Law Firm of Frederick J. Hanna (“Hanna”) came to a possible resolution when both sides filed a joint motion for a Stipulated Judgment and Order (“Order”). The case was before the United States District Court in the Northern District of Georgia. The Hanna firm’s primary practice was debt collection and filed lawsuits on behalf of their clients who included banks and debt purchasers. While law firms have been no strangers to enforcement actions by the Bureau, the case was the first action by the Bureau against a law firm that did not represent a consumer, thus testing the limits of the practice of law exclusion found in section 12 USC § 5517(e)(1)&(2) of the Dodd Frank Act. The CFPB alleged that the Hanna firm violated the Fair Debt Collection Practices Act (FDCPA) as well as the Consumer Financial Protection Act (CFPA).

A settlement seemed inevitable when Hanna lost two recent key motions. First, the Court denied Hanna’s motion to dismiss the CFPS’s complaint this past July. See CFSRC Update, July 15, 2015. The Court’s opinion was troubling due to its very broad interpretation of the Dodd-Frank Act. The Court found that the CFPB was well within its authority to regulate the practice of law as long as the lawyer’s interest was adverse to the consumer.  Hanna sought an interlocutory appeal to the 11th Circuit which denied last month as well.

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