New York City is Not Kind to the Process Serving Industry!

NYC Process Servers - Regulations Run-Amok?

"As of September 2011 there were 1,760 licensed individual process servers in NYC. There are currently 967; of those, 269 are newly licensed (within the past year or two). That means 1,062 process servers gave up their licenses”.  That’s a little more than 60%!"

Some have argued that this is a success story.  But for the efforts and $ of NYSPPSA and NAPPS the number of out of business process servers and process serving agencies would be a lot higher.   If this is model of a successful effort by a NAPPS and NYSPPSA I would hate to see a failure. 

All kidding aside, this is a tragedy that was addressed by some smart well-meaning folks.  Unfortunately, the combination of a few large agencies that did commit sewer service and an environment where the DCA regulates anything that moves was too much to overcome.  It is likely that no amount of money would have made a difference. 

You can find copies of charges issued to process servers in NYC and settlements here.  Scary list of charges and settlements... Name a process server in NYC or an Agency they are probably on the DCA's list. 

by jeff karotkin

NY Federal Class Action Lawsuit Alleges Racketeering & Sewer Service Filed May 1, 2013

Earlier this month a nationally recognized law firm Hughes, Hubbard & Reed LLP filed a Federal Class Action law suit alleging FDCPA violations and Racketeer Influenced and Corrupt Organizations Act (RICO) against debt collectors and their law firm. 

The Complaint alleges the defendants were engaged in a scheme involving improper litigation activities and the hiring of process serving agencies engaged in Sewer Service.  

The complaint mentions the names of the individuals process servers and agencies it alleges were part of the scheme. 

For example, some of the affidavits of service falsely attested that the process server effected "personal service" on the defendant at an address where that person did not live at that time, or never lived.

Other affidavits of service attested that the process server served the defendant at an accurate address but by " substitute service" on a fictitious person, such as a non-existent relative.

Other affidavits of service reported that the process server effected "nail and mail" service on an address where the defendant never lived.

On information and belief, Defendants knew that the affidavits of service were highly likely to be false.

On information and belief, Defendants knew that the vast majority of affidavits of
service supporting Defendants' applications for default judgment were fraudulent.

This case like the one filed in CA earlier this month could have a lasting impact upon the both the debt collection industry and the process serving industry.  Though there have been Sewer Service allegations for decades it was the American Legal Process case filed by the NY Attorney General that resulted in the far reaching regulations that currently face the NYC process serving industry.

CA Attorney General Sues Chase Over Debt Collection Practices

Last week the California Attorney General Kamala Harris sued Chase bank over its alleged consumer debt collection practices, robo-signing as well as allegations of systemic Sewer Service performed by the bank process servers. 

The Complaint alleges debt collection abuses against tens of thousands of California residents. 
 

"Defendants have flooded California’s courts with collection lawsuits against defaulted credit card borrowers based on patently insufficient evidence—betting that borrowers would lack the resources or legal sophistication to call Defendants’ bluff."

The Complaint also alleges that the Defendants do not properly serve consumers with the summons and complaint, despite filing proofs of service that declare under penalty of perjury that service was complete.

For example, Defendants, through their agents for service of process, falsely state in proofs of service that the consumer was personally served, when, in fact, he or she was not served at all—a practice known as “sewer service.”

This Complaint is similar to the Sewer Service allegations and Attorney General action in New York a few years ago that resulted in the arrest of the owner of a process serving agency and a severe crack-down and regulations placed on the process server community in that state.  It is estimated that many hundreds of process servers and process serving agencies in NYC ultimately went out of business because of the strict regulations that followed that scandal.

At this point it is impossible to say what the fallout will be in California and if the effects will be felt elsewhere in the collection and process serving industry.

What can or should the process serving industry leaders do to address these challenges?  I for one am not sure what the if anything CALSPro should do.  Let's face it there are already laws on the books making the some of the alleged actions of the process server illegal.  I could see stricter penalties being imposed for those who truly commit sewer service.

Whatever is decided by industry leaders they will need to make sure that they are credible, professional and committed to addressing the challenges facing the industry.  No amount of money and lobbying will help produce a solution that is reasonable if your industry leaders are not up to the task.  One would hope that the CA process servers would learn from counterparts in NY what works and what doesn't work...
by Jeff Karotkin