Palisades Collection, based in New Jersey, is under review by New York City's Department of Consumer Affairs, which has received 96 complaints against the agency since 2004, according to a story in The Wall Street Journal.

The collection agency has been named in 591 federal lawsuits since 2005, largely for alleged violations of the Fair Debt Collection Practices Act, including attempts to collect from people who say they don't owe it, according to the newspaper. Many of theses suits were eventually dismissed or settled out of court.

Now, a lawsuit filed this month in Manhattan federal court alleges that Palisades and its law firm Pressler & Pressler sued thousands of New Yorkers over unpaid accounts with AT&T Wireless. Those involved say they never incurred the debts. Many were never notified of the lawsuits, but the agency obtained default judgments totaling millions of dollars, according to the suit. Victims learned of the judgments years later, when their bank accounts were frozen, wages garnished or after discovering problems with their credit, the lawsuit says.

The suit has three named plaintiffs but could gain class-action status.  

Seth Berman, general counsel for Palisades and its parent Asta Funding, could not be reached for comment. Sheldon Pressler, head of Pressler & Pressler, also based in New Jersey, told the Journal the allegations are "absolutely false."

In 2009, Pressler & Pressler was one of 35 firms sued by the New York attorney general's office for allegedly using a process server that did not notify people of complaints, and then filed false affidavits claiming documents were served. The law firm settled the case but did not didn't admit any wrongdoing.

Two years ago, the same kinds of cases began popping up, lawyers in the unit said. People were showing up in court stunned to learn they had been sued in 2005 and 2006 by Pressler & Pressler, over AT&T Wireless debt they say they didn't owe.

A records search found that Pressler & Pressler filed more than 15,000 cases in New York City Civil Courts on behalf of Palisades in 2005 and 2006, according to the Journal.

The plaintiffs counsel includes lawyers from the New York Legal Assistance Group and private firm Hughes, Hubbard & Reed.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry