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Tuesday, October 13, 2009

Fraudulent Service of Process being addressed in New York City

New York City Councilman Garodnick Announces Reform
of Fraudulent Process Service.

Garodnick Announces Reform of Fraudulent Process Service

In the aftermath of Attorney General Andrew Cuomo suing 35 law firms for illegally failing to notify New Yorkers that they were being sued over old debts, Council Member Garodnick announced legislation to protect consumers from fraudulent process service.

Each year, debt collectors suing in New York City Civil Court collect $800 million in judgments. In 80 to 90 percent of those cases, New Yorkers never realize that they have been sued — frequently because the process servers hired by the debt collection law firm never deliver their court papers. The result is a default judgment, which can be used to freeze a bank account and garnish wages, and which ruins a person’s credit.

Council Member Garodnick’s bill would rein in process servers by requiring that they, and the agencies they work for, provide the City a surety bond, or insurance, in order to be licensed to do business in New York City.

“Everyone is responsible for repaying their debts—nothing here changes that,” Council Member Garodnick said. “But our neighbors deserve a chance to defend themselves in court from debt claims, which are often frivolous. It doesn’t help anyone for our neighbors to be put into financial purgatory over debts they never actually incurred.”