Law firm to pay $1M to settle CFPB action over debt-collection practices
Without admitting liability, a long-established New Jersey debt collection law firm has agreed to pay a $1 million fine to settle a U.S. Consumer Financial Protection Bureau action alleging abusive debt-collection practices.
The CFPB contended that Pressler & Pressler and a client debt-collection agency pursued half a million cases, frequently without adequate investigation of the claimed debt, New Jersey Advance Media reports.
The law firm’s client, New Century Financial Services, agreed to pay $1.5 million in a consent decree announced Monday. Like Pressler & Pressler, it is based in Morris County.
“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.”
The bureau said the two pursued hundreds of thousands of actions between 2009 and 2014, often based only on summary information and a computer program. Attorney review was allegedly minimal at best and sometimes nonexistent.
However, managing partner Sheldon Pressler said the firm had followed laws and practices that were current at the time and has since upgraded its operations. The feds found no improper affidavits and are not seeking to invalidate any judgments or make restitution to consumers, he added, but the firm felt it was in its best interest to get the matter settled and move on.
“The CFPB has formed its own unique interpretation of federal and state law today and applied those interpretations retroactively to our past practices that were, at the time, in accordance with state and federal laws,” Pressler told the Advance.