PARSIPPANY, NJ–Two NJ-based entities were churning out deceptive, intimidating, and illegal collections lawsuits, but have been ordered to stop, according to action taken on April 25 by the Consumer Financial Protection Bureau (CFPB).

Law firm Pressler & Pressler, LLP, and debt buyer, New Century Financial Services, Inc., are now barred from their practices of deceiving and intimidating consumers, such as filing lawsuits without verifying the validity of debts in question.

The federal agency found that both firms violated the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits unfair and deceptive acts or practices in the consumer financial marketplace.

The law firm and its named partners must pay $1 million, while New Century will have to pay $1.5 million to 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,” CFPB Director Richard Cordray said.

“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.”

In order to collect the alleged debts for New Century and others, the law firm filed hundreds of thousands of lawsuits against consumers. Two partners of the firm, Sheldon H. Pressler and Gerard J. Felt, both participated in the debt collection litigation practices.

Pressler & Pressler, located in Parsipany, collects consumers’ debts for creditors through lawsuits and other means, while New Century Financial Services, located in Whippany, buys and collects defaulted consumer debts and then hands off the accounts to Pressler & Pressler for collection, according to the CFPB.

“The CFPB found that to mass-produce these lawsuits, Pressler & Pressler used an automated claim-preparation system and non-attorney support staff to determine which consumers to sue. Attorneys generally spent less than a few minutes, sometimes less than 30 seconds, reviewing each case before initiating a lawsuit,” reads a CFPB press release.

“This process allowed the firm to generate and file hundreds of thousands of lawsuits against consumers in New Jersey, New York, and Pennsylvania between 2009 and 2014.”

According to the CFPB, Pressler & Pressler, the firm’s named partners, and New Century Financial Services also:

  • Made false or empty allegations about consumer debts: The CFPB found that the firm, the named partners, and New Century filed lawsuits against consumers without sufficient basis. Neither the firm nor New Century reviewed documents supporting the validity of debts.
  •  Filed lawsuits based on unreliable or false information: Some consumers had previously challenged the validity or accuracy of the debts, but the firm or New Century did not obtain or review information to justify their claims. The firm and New Century also filed suits and collected debt knowing that some account portfolios targeted for lawsuits contained unreliable or false information.
  • Harassed consumers with unsubstantiated court filings: The CFPB found that the firm, the named partners, and New Century filed collection suits generated mainly by automated processes that relied on summary data. The firm won the vast majority of the lawsuits by default when consumers did not defend themselves, even though neither Pressler & Pressler nor New Century had verified that the debts were actually owed.

The CFPB has authority over debt collection practices under the Fair Debt Collection Practices Act, and its enforcement action requires the entities to:

  • Stop filing lawsuits with unsubstantiated claims: Pressler & Pressler, the named partners, and New Century cannot file lawsuits or threaten to sue to collect debts unless they obtain and review specific account-level documents and information showing the debt is accurate and enforceable.
  •  Ensure accurate court filings: The firm, the named partners, and New Century may not use affidavits as evidence to collect debts unless they accurately describe relevant facts including that the individual executing the affidavit has personal knowledge of the debt, or, if not, has reviewed documentation related to the debt. The firm must also keep an electronic record showing it is following proper procedures.
  •  Pay civil penalties: The firm and the named partners must pay a penalty of $1 million to the CFPB’s Civil Penalty Fund. New Century must pay a penalty of $1.5 million.

Pressler and Pressler responded with their own announcement, April 25, saying it entered into a settlement agreement with the CFPB.

The firm acknowledged being “rigorously and thoroughly scrutinized” for over a year and said the settlement involved “no consumer redress or restitution, [and] no invalidation of judgments.” But the firm says it settled so that it can move on with its law firm practice and “minimize disruption.”

“This settlement is not about laws or rules that are currently in place,” said Sheldon H. Pressler.

“Instead, 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 federal and state laws.”

Pressler added: “The CFPB is out of touch not only with how financial services are conducted in a digital economy, but also the standards by which the courts themselves have deemed appropriate to practice law and satisfy the Rules of Court as written by the Court.” 

The firm cited two recent consent orders against “much smaller law firms,” where “serious affidadavit offenses were cited, consumer restitution was awarded and judgments were invalidated.” But Pressler & Pressler says the smaller firms paid a modest penalty only. 

“We paid a much larger penalty … We believe we were asked to pay this disproportionate penalty due to our financial success and perceived ability to pay.”


Business Reporter at New Brunswick Today |

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.

Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.