The CFPB continues to exercise unfettered power over debt collectors, debt sales, and now debt collection attorneys, under the guise of consumer protection, all of which had nothing to do with the cause of the financial crisis of 2008 upon which the Dodd-Frank Act was passed and the CFPB was created in the first place. The Dodd-Frank Act was created in order to prevent financial institutions and their products to unfairly target consumers and excessive costs in the origination of financial products, such as, mortgages, installment loans, credit cards, etc.
The CFPB has gone well beyond that congressional intent to regulate any action which affects consumers, including all aspects of debt collection
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Oct 06, 2014
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The CFPB argues for expansive authority, including the right to regulate collection attorneys operating in a legal capacity and the right to bring actions outside of the statute of limitations period.
The Consumer Financial Protection Bureau is putting up a fight in its latest move in the enforcement action against the law firm of Frederick J. Hanna & Associates, characterizing Hanna’s behavior as “reprehensible” and arguing Hanna’s motion to dismiss should be denied.
As ACA International previously reported, the CFPB is alleging that the attorneys at Hanna violated the Fair Debt Collection Practices Act and Consumer Financial Protection Act by the manner in which they prepared and filed lawsuits and used client affidavits in Georgia state court proceedings.
In its response to the motion to dismiss, the CFPB rejects Hanna’s arguments that the CFPB’s enforcement action is unlawful, and argues instead for expansive powers to regulate debt collection attorneys. Significantly, the bureau rejects Hanna’s arguments related to the CFPA’s “Practice of Law” exclusion, claiming that Congress expressly preserved the bureau’s authority over attorneys who collect debts from consumers who are not their clients, even when they are engaged in litigation activities.
Thus, despite Congress’s well-documented, careful steps to avoid any possible overlap between the bureau’s authority and the practice of law, as well as the plain language of the CFPA, the CFPB nevertheless attempts to justify its reach by arguing that the Practice of Law exclusion does not apply to attorneys who represent interests adverse to consumers. Also, despite the centuries-old principle of deference to states in regulating the practice of law, the CFPB continues its overreaching by arguing unconvincingly that the practice of law is not reserved for the states.
The CFPB is equally dismissive of Hanna’s First Amendment and Equal Protection claims. The CFPB contends that the First Amendment does not protect “deceptive and unfair debt-collection practices,” and because there is no fundamental right to practice law, the Equal Protection claim fails as well.
The CFPB continues to assert the existence of a “meaningful attorney involvement” standard, stating that a complaint in which the signing attorney is not meaningfully involved falsely conveys to a consumer that an attorney has reviewed the consumer’s file and reached a “considered, professional judgment” that the consumer is an appropriate candidate for legal action.
Finally, in another effort to expand its power, the CFPB dispenses Hanna’s arguments that the enforcement action is time-barred by citing to the traditional rule “time does not run against the King.” According to the CFPB, in the absence of an explicit congressional time restriction on government enforcement actions, such a limitation must not be construed.
As ACA has previously reported, the Hanna case could have substantial implications for law firms that are involved in collecting consumer debts on behalf of their clients. Judging by the enforcement action itself and the aggressive tone of the CFPB’s response to Hanna’s motion to dismiss, it is clear that the CFPB is focused on claiming authority over debt collection attorneys, even when acting in their legal capacity.
Given Hanna’s powerful response to date, however, the law firm seems prepared to take on the CFPB and thwart its efforts to improperly expand its power over debt collection attorneys.
“We are still in the process of reviewing the bureau’s response to our motion to dismiss,” said Joseph Cooling, the managing partner at Hanna Law Firm. “We continue to assert that the arguments set forth in our motion are meritorious and we look forward to filing our reply.”
ACA will continue to keep a close eye on the developments of this lawsuit.
Original publication can be found athttp://www.acainternational.org/cfpbarticle-cfpb-urges-court-to-deny-hanna-law-firms-motion-to-dismiss-33735.aspx