Alexandria, Va. — A recent case indicates that the Consumer Financial Protection Bureau (CFPB) will continue to move against debt-collection law firms for practices that the agency deems unfair or impermissible, according to an article in the March ABI Journal. “Unfortunately, the practice of debt recovery will remain a perilous minefield until the CFPB eventually and belatedly promulgates its debt-collection rules, which it has delayed,” write Alane A. Becket and William A. McNeal of Becket & Lee LLP (Malvern, Pa.) in “Debt-Collection Lawyers Feel Grip of Limitless Federal Power.” The article is the second installment in a series on the CFPB and its potential effects on bankruptcy practice.
Becket and McNeal examine the ramifications stemming from a 2014 case (Consumer Financial Protection Bureau v. Frederick Hanna & Associates PC) in which the CFPB sued a debt-collection law firm for the initiation of collection suits after allegedly insufficient attorney involvement in the review process. The CFPB asserted that Frederick Hanna & Associates PC violated the Fair Debt Collection Practices Act's bar against any false, misleading or deceptive misrepresentation. Rather than waging an expensive fight in court, Frederick Hanna & Associates settled with the CFPB.
Becket and McNeal write that attorneys working with debt-collection clients should heed the lessons learned from the case and subsequent settlement. “Documentation requirements have been expanded and are more onerous for creditors, debt buyers and their attorneys,” they write. Additionally, the authors warn that an attorney is now personally responsible and culpable for defects in the affidavit executed by a client.
“Exactly how it is possible that an attorney could police the quality and sufficiency of a client's affidavit remains unclear,” write Becket and McNeal. “The inevitable result of this case, as with all new regulations, is an increase in the cost of attorney services, and consequently a likely additional burden for consumers.”
To obtain a copy of “Debt-Collection Lawyers Feel Grip of Limitless Federal Power,” published in the March edition of the ABI Journal, please contact ABI Public Affairs Manager John Hartgen at jhartgen@abiworld.org or 703-894-5935.
Becket will be moderating a session at ABI’s 34th Annual Spring Meeting titled, “What Is the CFPB, and Why Do I Care?” For more information about the Annual Spring Meeting, please click here: http://www.abiasm.org.
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