The Consumer Financial Protection Bureau (CFPB) has ordered two debt collection firms to stop an illegal collection operation that used automated lawsuit generator. The law firm- Pressler & Pressler, LLP and debt buyer- New Century Financial Services, Inc. have been harassing consumers with lawsuits often based on “flimsy or nonexistent evidence.”
“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 in a press release. “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 lawsuits were allegedly manufactured by an automated system unsupervised by a lawyer, but rather untrained support staff, which spent less than 30 seconds on some cases to verify the claims of each lawsuit.
The CFPB found that the lawsuits violated the Dodd-Frank Act on three counts: making false or empty allegations about consumer debts, filing suits with bad information, and harassment with “unsubstantiated court filings.” The civil penalties include $2.5 million to $1 million for the law firm and $1.5 million for the debt buyer.
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