CFPB Stops Law Firm & Debt Buyer from Filing Illegal Debt Collection Lawsuits

Recently the Consumer Financial Protection Bureau (CFPB) ¹⁾The Consumer Financial Protection Bureau is a federal agency that protections consumers from unfair, deceptive, or abusive practices and takes action against companies that break the law entered an order to stop a New Jersey debt collection law firm and the junk debt buyer from filing illegal debt collection lawsuits.

The law firm Pressler & Pressler and junk debt buyer New Century Financial Services were fined a combined total of $2.5 million and ordered to stop filing debt collection lawsuits that were unsubstantiated.  The CFPB director Richard Cordray stated:

“For years, Pressler & Pressler churned out one lawsuit after another to collect debts for New Century that were not verified and might not exist. 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.”

Check out this video on recent CFPB actions against junk debt buyers:

What the Consumer Financial Protection Bureau Found

The CFPB found the following violations of debt collection law by the law firm and the junk debt buyer:

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

Why You, a Consumer in Arizona, Should Care about the CFPB Findings?

The law firm in this matter is based in New Jersey and the New Century Financial, the junk debt buyer, hasn’t filed a case in Arizona since 2012. So why should consumers in Arizona care about what the CFPB has done in this case?

The reason you should care is because it many of the junk debt buyers that operate in Arizona also file debt collection lawsuits even though they have not verified the account they are suing on.  Also, similar to the New Jersey law firm, the law firms in Arizona that represent junk debt buyers tend to file hundreds (and even thousands) of lawsuits each year with typically a handful of attorneys employed to handle the case load.

In the New Century investigation the CFPB found that the law firm’s attorneys were spending less than a few minutes (sometimes less than 30 seconds) on a case prior to filing the lawsuit.

The main take-away from this recent CFPB order is that no matter whether you are in Arizona or New Jersey the huge volume of lawsuits filed by debt buyers are replete with problems there are very few attorneys spending any significant time with a file prior to filing it with the court.

Debt collection lawsuits wreck havoc on people’s lives. The filing of a lawsuit raises the collection game to a entirely different level. If a debt buyer wins their debt collection lawsuit they will then be armed with a judgment that will enable them to garnishment wages, lien homes, and sweep money out of bank accounts.

This leads to people not being able to paying their rent, buy groceries, and often leads to bankruptcy. Before a junk debt buyer should be permitted to inflict such chaos on a family they should, at a minimum, be required to verify that the debt they are suing on is accurate and that all payments have been properly credited.

Learn more about the impact of debt buying lawsuits in Arizona:

Safe Guards  – The Arizona Rules of Evidence & The Arizona Rules of Civil Procedure

Because a judgment gives the junk debt buyer such great power there are safe guards in place to make sure that the court is making its decision based upon accurate information and authentic documentation.

These safe guards are found in the Arizona Rules of Evidence (that govern the types of evidence that can come before the court) and the Arizona Rules of Civil Procedure (that provide the rules to the litigation and ensure that both sides are playing fairly).

It is important for Arizona courts to allow consumers to contest the lawsuits filed by junk debt buyers by requiring that they adhere to both the Rules of Evidence and the Rules of Civil Procedure.

This ensures two things: (1) that the case will be decided on the merits and best evidence possible; and (2) provides both the consumer and the debt buyer some certainty in the legal process.

When the Rules are not applied in a consistent manner (or sometimes not adhered to at all) it not only results in a misapplication of justice, but it creates an environment of uncertainty where neither party is sure of whether it is their best interest to settle the case or take it to trial.  Without consistency it becomes a crap shoot where you could win and owe nothing or you could end up with a judgment in full – with either result being truly unpredictable.

Have You Been Sued by a Junk Debt Buyer in Arizona?

If you have been sued by a junk debt buyer in Arizona it is important to take action – and do so quickly.  If you delay and ignore the suit you will likely end up with a default judgment entered against you and will likely be faced with wage garnishment or bank levy.

We can help.  The Arizona Consumer Law Group had handled more than 300 trials/arbitrations with junk debt buyers and we know the best way to attack their claims and help you achieve the best result possible.  We can be reached at (480) 420-4028 for a free consultation.