the order.17 The attorney review section of the Consent Order fleshes out what the CFPB considers to be meaningful attorney involvement in debt collection litigation. Many of the requirements can be satisfied, in part, with the aid of technology and support staff. For example, technological products can scan bankruptcy filings, verify a consumer’s address, and check the statute of limitations. The Consent Order provides that, with respect to these issues, the attorney may employ “methods or means proven to be historically reliable and accurate.”18 Although technological resources can aid in these requirements, the Consent Order does require that the attorney of record be involved in the process.

And the Order unambiguously requires that the attorney personally examine the original account level documentation prior to filing suit. C. Affidavit Oversight The Consent Order contains two provisions related to affidavits. The first requirement prohibits use of what the Order refers to as “deceptive affidavits.”19 The second requires the Hanna Firm to “review and analyze the processes and procedures employed by any entity that employs” the firm on an annual basis to ensure that the client’s affidavit procedures comply with the Consent Order.20 The focus on affidavits is, of course, not unique to the Hanna Consent Order. The PRA and Encore consent orders, among others, also contained numerous affidavit-related requirements.

And affidavits in connection with consumer debt collection have received regulatory and media attention since the onset of the 2008 financial crisis, most notably the robo-signing controversy that arose in the mortgage servicing context. The Hanna Consent Order should be viewed as the latest step in this continued regulatory focus, not as imposing an isolated requirement unique to a single law firm. Unlike the meaningful attorney involvement and original account level documentation provisions, many of the affidavit requirements are found in existing law. The Hanna Consent Order prohibits falsely stating that the affiant has “personal knowledge of the validity, truth, or accuracy of the character, amount, or legal status of” the debt; stating that an affidavit is notarized when it was not executed in front of a notary; falsely stating that particular documents relate to the particular consumer being sued; and misrepresenting the affiant’s review of original account level documentation.21 Finally, the attorney of record must certify that any affidavit submitted in connection with a debt collection lawsuit satisfies these conditions. These examples are specific to the Consent Order, but state law already prohibits making any false representations in an affidavit.

Each of the misrepresentations set forth in the Consent Order would likely violate that general prohibition. The main difference between existing law and the Consent Order involves the attorney’s knowledge requirement. Most state rules of professional conduct prohibit submitting evidence that an attorney “knows to be false,” but do not 16 DBA the Magazine Spring 2016 M place an affirmative obligation to guarantee the truth of the evidence submitted.22 The Consent Order, by contrast, places an affirmative obligation on the attorney of record to certify that an affidavit does not contain any of the enumerated misrepresentations.23 The Consent Order’s affidavit provision relates to one core concern: ensuring that the person executing affidavits has actually reviewed the consumer’s account. As long as the affiant personally reviews the consumer’s account (including the underlying documentation establishing the facts set forth in the affidavit) and signs the affidavit in front of a notary, the substantive affidavit provisions of the Hanna Consent Order will have been satisfied. In addition to the substantive requirements, the Consent Order requires the Hanna Firm to visit its clients annually to “reasonably ensure” that their affidavit processes and procedures comply with the Consent Order.24 Compliance with this provision will require cooperation between the Hanna Firm and its creditor and debt buyer clients.

We recommend similar cooperation and annual visits between other debt collection law firms and their clients as part of the vendor management process. III. The Hanna Consent Order and Debt Buyers. The Hanna Consent Order imposes a unique obligation on the firm when it represents a debt buyer, as opposed to an original creditor. Specifically, the attorney of record must possess “a certified or otherwise properly authenticated copy of each bill of sale or other document evidencing the transfer of ownership of the Debt at the time of Charge-off to each successive owner” prior to filing or threatening to file suit.25 The document must reference the “specific debt being collected upon”; a general statement that company x is transferring accounts to company y will not suffice.26 This provision establishes a chain-of-title documentation requirement for purchased debt (not unlike similar requirements in the NYDFS regulations and California’s debt purchasing legislation).27 Compliance is fairly straightforward for debt that has only been transferred once, but could become difficult for debt that has been transferred multiple times. It may also be difficult to establish the chain of title for debt that was transferred before the CFPB became active in this area, when transfer documents may have been less robust. IV. Hanna and its Impact on Debt Buyers. The Hanna Consent Order is the latest step in the CFPB's effort to affect systemic change of the debt purchasing and collection industries.

The Order nominally applies to a single firm and its partners, but its implications for the debt purchasing industry are readily apparent. The similarities between the Hanna Consent Order and Encore and PRA consent orders are no accident. The CFPB was motivated by similar concerns, and addressed them with two different types of parties involved in the collection process. The most significant change going forward relates to the type of documentation that a debt buyer must obtain and provide to a collection law firm.

The CFPB has made it clear that it expects to see original account level documentation pass from the debt seller to the debt buyer, and then from the debt buyer to the collection law firm. A complete chain of title referencing the specific debt being collected or sued upon must also pass from the seller to the buyer, and then to the law firm. Technically speaking, the Hanna Consent Order only requires this documentation before the firm files or threatens to file suit, not immediately upon placement. But we recommend obtaining it at the time of purchase, and providing it to a debt collection law firm when the account is placed.

Doing so will avoid unnecessary risk and make the process of retaining counsel and initiating legal process more streamlined and efficient. Waiting until an account is referred to a law firm to obtain the necessary documentation from the creditor will delay the process and enhance the risk that the required documentation is not available. Moreover, because the documentation must be in the law firm’s hands before it “threatens” suit, it would need to be provided before the law firm engages in any communication with the consumer (even an initial validation notice).

As a practical matter, this means that providing the original account-level documentation must occur at the time of placement of the account with the law firm. The affidavit requirements are fairly straight forward, at least in terms of affiant compliance. To comply with the consent order, the affiant must: 1) review the consumer's account and any documents attached to the affidavit; and 2) execute the affidavit in front of a notary public. The account review must be sufficiently thorough to establish personal knowledge of all facts stated in the affidavit.

We also recommend that debt buyers meet annually with outside debt collection law firms retained by the company, to demonstrate that the company's affidavit processes and procedures are in compliance with the Hanna, Encore, and PRA Consent Orders, as well as any additional action the CFPB takes with respect to affidavits. Finally, we recommend that debt buyers require their outside debt collection firms to comply with the substance of the Hanna Consent order, and to monitor their compliance as part of the vendor management process. V. Conclusion. The Hanna Consent Order is a significant development in the regulation not only of debt collection law firms, but also creditors and debt buyers. It provides much needed clarity on the judicially created and largely undefined meaningful attorney involvement standard. The order also reaffirms the CFPB's interest in all aspects of the debt purchasing and collection industries, and highlights the CFPB's focus on substantiation and the use of affidavits.

The order further demonstrates that the CFPB is being consistent in its themes and areas of focus, which provides greater clarity to members across the debt collection and purchasing industries. 1 CFPB v. Frederick J. Hanna & Assocs, P.C., 1:14-cv-02211-AT, Dkt. No.

61-1 (Dec. 28, 2015). 2 In the Matter of Encore Capital Group, Inc., 2015-CFPB-0022 (Sep. 9, 2015). 3 In the Matter of Portfolio Recovery Assocs., LLC, 2015-CFPB-0023 (Sep. 9, 2015). 4 CFPB v.

Frederick J. Hanna & Assocs, P.C., 1:14-cv-02211-AT, Dkt. No. 1 (Compl.). 5 Id.

¶ 37. 6 Id. ¶ 20. 7 Id. ¶ 22. 8 CFPB v.

Frederick J. Hanna & Assocs., P.C., 114 F. Supp.

3d 1342, 1351-75 (N.D. Ga. 2015). 9 Id.at 1375-81. 10 Hanna Consent Order, pp.

6-7. 11 Hanna Consent Order, p. 5. 12 Id. (emphasis added). 13 See PRA Consent Order, pp.

4-5, 28-33; Encore Consent Order, pp. 4, 31-36. 14 The requirement for original account level documentation is also consistent with debt seller consent orders. 15 23 NYRR § 1.4. 16 Hanna Consent Order, pp. 7-9. 17 Id. 18 Id.

at 8-9. 19 Id. at 9-10. 20 Id. at 11. 21 Id.

at 9-10. 22 See, e.g., Ga. R. Prof.

Responsibility 3.3. 23 Hanna Consent Order, p. 10. 24 Id.at 11. 25 Id.at 7. 26 Id. 27 23 NYRR § 1.4(c); Cal. Civ.

Code. § 1788.52. Because the Consent Order allows for "other documents transferring ownership," an original bill of sale is not necessary to satisfy this requirement.

Accordingly, the requirement could potentially be satisfied in the same manner that debt buyers have been complying with New York, California, and other pertinent state law requirements. About the Authors Christopher J. Willis is a partner in Ballard Spahr's Litigation Department and leads the firm's Consumer Financial Services Litigation Group. In addition, Mr.

Willis is a member of the firm's Consumer Financial Services and Mortgage Banking practice groups. He devotes his practice to assisting financial services institutions facing government investigations and examinations, counseling them on fair lending risk and compliance assessments, and defending them in individual and class action lawsuits brought by consumers and enforcement actions brought by government agencies. Daniel L. Delnero is an associate in Ballard Spahr's Litigation Department and a member of the firm's Consumer Financial Services and Mortgage Banking practice groups.

Mr. Delnero represents a range of companies and individuals in consumer financial services litigation. He also advises clients in large, complex matters involving banking and finance, constitutional due process challenges, corporate fraud, and state law tort actions.

Daniel received his J.D. from The University of Georgia School of Law and is admitted to practice in Georgia. M Spring 2016 DBA the Magazine 17 .