Debt collection law firm Pressler & Pressler, LLP, two principal partners, and New Century Financial Services, Inc., a debt buyer has been ordered by the Consumer Protection Financial Bureau to stop issuing debt collection lawsuits based on insufficient evidence. Furthermore, the named partners and New Century have been fined a total of $2.5 million which will be paid into the Bureau’s Civil Penalty Fund.
“For years, Pressler & Pressler churned out one lawsuit after another to collect debts for New Century that were not verified and might not exist,” said CFPB Director Richard Cordray. “Debt collectors that file lawsuits with no regard for their validity break the law and violate the public trust. We will continue to take action to protect borrowers from abuse.”
Pressler & Pressler, a law firm based in New Jersey collects debts for creditors by issuing lawsuits. Also operating in New Jersey is New Century Financial Services, a company that buys and collects overdue consumers debts which is then handed to Pressler & Pressler for collection.
The CFPB found that to collect the alleged debts, Pressler & Pressler mass-produced lawsuits via an automated claim preparation system with non-attorney support staff determining which debtors to sue, with attorneys spending less than 30 second reviewing each case. As a result, the firm was able issue hundred of thousands of lawsuits against consumers in Pennsylvania, New Jersey and New York. CFPB found that Pressler & Pressler, the firm’s named partners, and New Century Financial Services violated the Fair Debt Collections Practices Act by:
- Made untrue or empty claims pertaining to lawsuits that were filed against consumers
- Issued lawsuits based on unreliable or incorrect information
- Harassed consumers with unverified court filings.
Enforcement Action Taken:
The Dodd-Frank Act authorizes the CFPB take action against institutions or individuals that engage in unfair, deceptive, or abusive acts or practices. In addition, the CFPB also has authority over any violations to the Fair Debt Collection Practices Act. As such, the CFPB orders require that Pressler & Pressler, the firm’s named partners, and New Century Financial Services must:
- Refrain from filing lawsuits with unverified claims.
- Ensure exact court filings:
- Pay civil penalties
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