CFPB Fines Major Debt Collection Firm
The U.S. Consumer Financial Protection Bureau recently fined New Jersey law firm Pressler & Pressler and debt collection company New Century Financial Services for repeatedly filing abusive debt collection lawsuits, which were in violation of the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the bureau, a significant number of the 500,000 debt collection actions filed by these firms were unfair, deceptive, or based on non-existent evidence. In many cases, attorneys spent less than 30 seconds reviewing a case before initiating a lawsuit. Despite the fact that these firms frequently failed to verify that debts were owed, the majority of lawsuits against consumers were won by default judgments.
The bureau’s consent order to halt illegal practices by Pressler & Pressler and New Century is good news for low-income New Jersey residents. Many consumers are at an enormous disadvantage in debt collection lawsuits and often have difficulty navigating the court system and identifying relevant issues or deadlines in their cases. The bureau’s recent investigation emphasizes how many debt collection cases are won not based on merit but simply because a defendant fails to answer a complaint – frequently due to confusion over how to respond, belief that a mistake was made, or service to an incorrect address. Ensuring that law firms and debt collection companies comply with the law and refrain from filing deceptive or meritless lawsuits is an important step in protecting consumers from abuse.
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