The Consumer Financial Protection Bureau ordered the New Jersey law firm Pressler and Pressler and a debt buyer to pay $2.5 million for allegedly filing "mass-produced" lawsuits against consumers based on nonexistent debts.

The CFPB's proposed orders, filed Monday in federal court, accuse the Parsippany law firm, its two principal partners and New Century Financial Services of unfair litigation activities. The two companies and the law firm's two principal partners, Sheldon Pressler and Gerard Felt, also were accused of making false or unsubstantiated representations about owing a debt.

Both companies and lawyers are barred from filing lawsuits without determining if the debts are valid, the bureau said.

"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 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."

Sheldon Pressler, the law firm's managing partner, took issue with two broad CFPB claims: that the law firm needed physical documentation rather than electronic data to file claims, and that it did not have a thorough validation process.

He said that the CFPB had "rigorously and thoroughly scrutinized the firm for more than a year and a half" but that the settlement involved "no consumer redress or restitution, no invalidation of judgments and no findings of the use of improper affidavit practices."

"This settlement is not about laws or rules that are currently in place," Pressler said in a press release. "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."

The CFPB claimed that the law firm used an automated claim-preparation system and large nonattorney support staff to essentially "robo-sign" lawsuits without verifying the consumer debts.

Pressler and Pressler generated and filed "hundreds of thousands" of lawsuits against consumers in New Jersey, New York and Pennsylvania between 2009 and 2014. Pressler and Pressler's web site lists 19 attorneys and more than 280 employees.

The CFPB said the attorneys typically spent less than a few minutes – and sometimes less than 30 seconds – reviewing each case before initiating a lawsuit, the CFPB said.

Though there was no supporting documentation other than summary data about the debts, the law firm won the vast majority of lawsuits by default when consumers did not defend themselves, the CFPB said.

Neither Pressler and Pressler nor New Century "had verified that the debts were actually owed," the CFPB said in the press release.

Going forward, the firms must review specific account-level documents and information showing that a debt is accurate and enforceable, the agency said. The two firms and lawyers also are barred from using affidavits as evidence to collect debts, the CFPB said.

Pressler and Pressler and its two partners were ordered to pay $1 million; New Century was ordered to pay $1.5 million in civil penalties.

The law firm said it settled the complaint "so we can move on with our law firm practice."

The company also said it believed it was asked to pay a disproportionate penalty "due to our financial success and perceived ability to pay."

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