North American Recovery Had No License to Collect Debts in New Jersey, Class Action Claims

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A proposed class action accuses North American Recovery (NAR) of violating New Jersey law by collecting debts from residents without a license to do so.

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The 29-page lawsuit says that as part of its business, the Utah-based debt collection agency purchases pools of past-due and defaulted credit accounts from credit card companies for “pennies on the dollar” and then attempts to collect those debts from consumers. The case adds that NAR also hires other debt collectors to pursue collection efforts on its behalf, including New Jersey-based law firm and co-defendant Fein, Such, Kahn & Shepard, P.C.

The New Jersey Consumer Finance Licensing Act (NJCFLA) requires companies that purchase and take assignment of credit accounts to be licensed as a consumer lender or sales finance company, the complaint relays. According to the filing, NAR’s unlicensed status has rendered the consumer debts it acquired “void and unenforceable” under the NJCFLA.

The filing alleges that the defendants never disclosed to New Jersey consumers that they had no legal right to possess and collect the individuals’ debts due to NAR’s lack of proper licensure.

“Had they known the debts were void pursuant to the NJCFLA, they would not have made payment arrangements,” the case says. “Instead, they were deceived and threatened into making payments because [the defendants] threatened and filed lawsuits against them while hiding material information[.]”

The suit further claims that NAR’s failure to obtain proper licensing means that the defendants unlawfully assessed interest on the consumer accounts they acquired.

The lawsuit looks to represent anyone in New Jersey who is listed as the borrower or purchaser in an account assigned to NAR, Inc. or any of its sister or parent entities and was subject to collection including collection letters, collection calls, collection actions and credit reporting.

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