The Consumer Financial Protection Bureau said on Monday (April 25) that it ordered the debt collection law firm Pressler & Pressler, two principal partners and another debt buyer — New Century Financial Services — to “stop churning out unfair and deceptive debt collection lawsuits based on flimsy or nonexistent evidence.”
The bureau said that the consent order keeps these entities from practice that could be seen to deceive or intimidate consumers. That would include filing lawsuits without first determining if debts are indeed valid. The law firm and the two partners named have been ordered to pay $1 million, with New Century ordered to pay another $1.5 million, into the CFPB’s Civil Penalty Fund.
Pressler & Pressler, based in New Jersey, collects debts through suits on behalf of creditors. The other firm, New Century, buys debts and brings those debts to Pressler. The two partners, Sheldon H. Pressler and Gerard J. Felt, were part of the firm’s litigation practices. Over the course of hundreds of thousands of suits, said the CFPB, the firm used automated systems to bring claims, in high volumes, from 2009 through 2014. Neither the law firm nor New Century, said the CFPB, reviewed documentation adequately and collected money, even while knowing that at least some information they used was unreliable or even false.
Now, said the CFPB, the law firm, the partners and the debt collector cannot file lawsuits unless they review account-level data and ascertain that information is accurate. Affidavits, said the CFPB, cannot be used to serve as evidence to try and collect debts unless it is shown that those affidavits have legitimate knowledge of the debt or, at the very least, have taken on due review of documentation tied to the debt. They also must keep records, electronically, showing adherence to procedure. The CFPB also said that it has purview to levy those penalties due to actions that violated the Fair Debt Collection Practices Act.