Effort To Curb "Sewer Service" May Require NYC Process Servers To Use GPS To Electronically Record All Attempts To Deliver Lawsuit Notice To Defendnts

In New York City, The New York Times reports:

• In a proposal aimed at unscrupulous debt collectors, the City Council is considering legislation that would require process servers to use global positioning systems to show that they have actually visited consumers’ homes or workplaces to deliver notices of collection proceedings.

• Lawmakers hope the measure will help curb a long-running practice known in legal circles as “sewer service,” which occurs when process servers fail to serve court papers on defendants but file affidavits swearing that they did so — which allows the cases to proceed.(1) [...] The bill would require process servers in New York City to electronically record every instance in which they serve or try to serve someone, using a global positioning system that would pinpoint their exact location.

• Advocates for consumers say that sewer service has grown in recent years because of the recession and an increase in the number of collection firms that buy bad debts from credit card companies for pennies on the dollar and then seek to collect them.(2)

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• A federal class-action lawsuit(3) was filed in Manhattan in December against several debt-purchasing companies and firms that help them collect debts, accusing them of fraudulently obtaining judgments against debtors.

• The bill was introduced amid an investigation by the state attorney general, Andrew M. Cuomo, into fraudulent process serving. Last year, Mr. Cuomo’s office arrested the owner of a Long Island process serving firm, accusing the company’s servers of frequently filing false affidavits in which they claimed to have attempted to serve three and four people at the same time.(4)

For the story, see Council Seeks to Crack Down on Process Servers Who Lie.

(1) According to the story, the victims are often debtors involved in collection suits who, when they fail to show up in court, are nailed with default judgments, often for thousands of dollars. Councilman Daniel Garodnick, a Manhattan Democrat who is the bill’s lead sponsor, reportedly said “Tens of thousands of people are being sued for debts that they may or may not truly owe, but they only learn that they’ve been sued after they’ve lost, and find their bank accounts are frozen and their wages are garnished.”

(2) For more on the "sewer service" problem, see MFY Legal Services: Justice Disserved (A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York ) (documents problem of improper service of process in debt collection lawsuits that have led to judgments entered against unknowing victims).

(3) According to an earlier New York Times story [Suit Claims Fraud by New York Debt Collectors]:

• The class-action lawsuit [...] goes after an entire debt collection chain, starting with the debt-buying companies, the law firm they hired to collect the debt, and the process-serving firm used to notify debtors. The suit names five debt-buyer firms with variations of the names L-Credit and LR Credit. All are subsidiaries of Leucadia National, a $6 billion publicly traded holding company engaged in various businesses, including timber and manufacturing. The company, which is also named as a defendant, declined comment on the suit.

• Mel S. Harris & Associates, the law firm named in the suit, did not return phone calls seeking comment. The process-serving company, Samserv Inc., out of Brooklyn, denied allegations that it filed false affidavits of service. [...] The lawsuit was filed by MFY [Legal Services], the Neighborhood Economic Development Advocacy Project and the law firm of Emery Celli Brinckerhoff & Abady. It claims it could represent more than 100,000 victims of judgments won through the actions of the companies in New York civil courts since 2006. A central claim of the action is that most debt-buying firms do not get enough information in the volume data they buy to meet the burden of proof to win a debt case. They therefore seek default judgments.

See also: Civil Rights Advocates File Civil Racketeering Lawsuit Against Major Debt Collection Network.

For the class action lawsuit, see Sykes, et al. v. Mel S. Harris and Associates LLC, et al.

(4) The Times reports that one server, according to the AG's complaint, claimed to have made 77 service attempts on one day, interspersed at locations in Brooklyn and Cattaraugus County, roughly 400 miles apart — a feat that would have required 11 round trips covering 8,194 miles.