Earlier this month the Federal Trade Commission held a two day roundtable discussion in Chicago to address debt collection litigation and arbitration. The opening session was on the following topics:
Initiating Suits - Default Judgments and Service of Process.
The Panel was made up of approximately fifteen speakers ranging from Judges, Professors, Consumer Advocates, Debt Buyers and Collection Lawyers.
Over the course of an hour or so process servers took a beating. It was strongly suggested that the high default rates associated with consumer debt collection cases nationally were the result of among other things improper service of process, a complete lack of service or "sewer service".
By now, anyone that is paying attention to the challenges facing the public image of the private process serving profession has read about the situation in New York where it is alleged that a process serving agency was not properly serving collection law suits for some of the largest collection law firms in the country. Currently the New York Attorney General is investigating the practices of process serving agency in question and has suggested that as many as 100,000 default judgments may be thrown out or set aside. It is also worth noting that the AG is also focusing on the collection law firms as well and has indicated that they had a duty to oversee the process serving agency whose practices have come into question.
Needless to say, the panel was fully aware of this story and others such instances. The result was more than an hour focused on this issue. The panel discussions went on over a two day period and throughout the sessions the process serving issues continued to be raised.
Having sat through the webcast of this event a few comments were most troubling. They are not verbatim because I have not read the official transcript yet, so I will paraphrase:
• Speaker - Why isn't the National Association of Professional Process Servers here?
• Speaker - I am not sure that such an organization even exists.
• Speaker - Process servers should be subject to the Fair Debt Collection Practices Act (FDCPA)
• Speaker - I would like to see several things that should be define what we see as unfair deceptive practice. First the filing of a false return of service in a collection case.
• Speaker - 85 to 95% of collection cases result in defaults. The high default rate means no process is being served, we need to require servers to keep log and they should be forced to make them public.
• Speaker - I think the three biggest problems that I see, first one is one that has not been redressed by the statutes yet and that's the service of process. It is a problem that does not start with judicial supervision. It starts with the process server making a decision to do something outside the courtroom namely not serve that process on the defendant.
To be fair, process servers were not the only industry that took heat. The debt buyers, collection agencies, and collection law firms took their fair share of the focus.
The image of process servers in my opinion is at an all time low. Even in the best of times we are about as popular as the tax man. I believe the current problems are a result of a few bad apples, but you would not know that if you were reading all the bad PR. It is time that professional process servers start policing their own and get serious about addressing their image problem.
If you are interested in seeing the webcasts for yourself and reading the transcripts of the sessions, please visit http://www2.ftc.gov/bcp/workshops/debtcollectround/#090805 for all the information. You will also find information at that link on the next roundtable discussion in San Francisco, CA, next month.
Again, we witness governmental agencies looking to place the "blame" for their oversights. Process Serving is a profession AND an art, and it would seem the attendees at that round table know little about it. Let's make sure that NAPPS sends a representative to the next session. The American people need to know that their Constitutional rights to "due process" ARE being protected, if not by their elected officials then by an association of professionals dedicated to upholding the 5th and 14th Amendments.
ReplyDeleteHaving worked in the banking, collection and finance industries I can assure you that there is plenty of blame to throw around. I have been a professional process server for many years. I have seen plaintiffs serve their own papers, attorneys and/or their staff being allowed to serve their own papers, etc...There are many things that need to be addressed by the FTC. Default judgments are normally the result of a debtor not answering the suit, not because they haven't been properly served. Here in Washington I personally know of several companies and servers that are not in compliance with Washington State server registration requirements (and the various Auditors are complicit in this). I have also witnessed process servers drop serving including putting the documents in a USPS mailbox or receptacle, without knowing whether or not the target resides there or if anyone is even home. I know of several collection agencies that routinely ask us to drop or abode serve or to sub-serve even after we've told them that we were told the target does not live there. Our answer to that is that if you want us to do something like that, put it in writing and we will do it. BUT!!! Our affidavit will accurately reflect everything since we cannot lie to the court or perpetuate a fraud upon the court. The affidavit will include the communications from the client and if we have received information from someone at the address that too will be included, along with the written authorization/request from the client. This usually stops them dead in their tracks.
ReplyDeleteWe were recently asked to nail and mail documents from a California company after we told the owner that the father stated the target had moved back to L.A. and when I told him to send me written authorization he refused to. I see this a lot and it's just not good practice to lie to the courts as our reputation is at risk, not to mention the potential for going to jail for fraud and perjury.
In a nut shell they are right. There are problems in this industry. There are problems in every industry. The issues that are being discussed concern service associated with collection cases. During my 20 years in this industry I too have had collection clients tell me to nail and mail or subserve papers after being told that the target was not located at the address. The real problem is with the servers and the servers that undermine the entire service industry. When I hear of change in our industry I personally don't think much of it. Why, because I am in control of my servers and in control of the work that I handle. I have never had to take work from attorneys that dictated to me how to serve process and how much I charge. I too have had to have a lawyer or two give me written directions concerning what I believed to be an improper service, but our records would have supported our belief and if push came to shove we would have testified in court that we knew the target was not located at the address service was made, but service was made pursuant to our clients specific directions. The next pin to drop will be services for the state and city governments, why you ask, because those services are being handled by the same entities for the most part. Companies that are under pricing their work and as a result are putting pricing pressure on the rest of us. When service companies low ball their prices they are essentially telling their customers that they are providing something less than the rest of the industry, the others who were not able to compete at their lower level of pricing are doing a smaller volume but are probably not in any trouble. I look forward to these types of discussions and welcome constuctive insight into our industry, but from my experience it is not likely to come from within and I personally hope that the additional requirements that are coming down the pike keep the types of servers that create these types of perception issues out of the industry entirely. It is also important that you do not use these cheap servers for your agent work also, use someone who you trust and have faith in, not the cheapest guy closest to your target zipcode.
ReplyDeleteA fairly large collection attorney firm told us that they wanted us to routinely drop serve on anyone living at the addresses they provide, regardless of assessor records and photo identification. They did a good amount of work and were quite confident of their addresses. They stated that their attorneys would stand up in court and argue the merits of why service is valid, even though the process server knew it wasnt.
ReplyDeleteWe told them that we could do so...
On our terms.
On all documents that were properly served in accordance with our rules and laws we would provide them with a notarized affidavit of service could be filed with the court.
On ones where the addresses proved to be invalid we told them that would deliver the documents and provide them with a signed affidavit of delivery stating that we delivered the documents to an individual at the address.
We made it very clear that this affidavit would be similar in function to the green USPS registered mail card and would absolutely not state that process service was being performed. We also told them that when the address was proven to be incorrect that the docs would be returned to our office and given to unlicensed individuals employeed through a seperate courier service so as to avoid any and all confusion with the court. The affidavit would simply state that documents were delivered to an individual who claimed that the defendant did not live at the address provided. It was then on them to use this as an exhibit in their argument to the judge as to why this should be deemed valid service.
Despite their stand that they would argue the merits of service... This was apparently not sufficient (surprise!) for the firm. As such they demanded that we provide an affidavit of service instead.
We then promptly told them to find another company to do their work (to put it nicely).
Dignity does not have a price tag. Unfortunately, many individuals in our profession believe that it does.
Process servers walk a fine line between protecting the rights of the people they are serving and ensuring that the party serving is not put through an undue burden of expense while locating and serving individuals.
Defaults, publication and alternative means of service exist to move the case along without infringing on anyones rights.
Defaults can be set aside and provisions for doing so exist in most jurisdictions. To connect a high default rate to the assumption that service is not being completed properly is absolutely ridiculous. Especially when realizing that the default rate is high on the ones who actually get served.
Not only that... But we are talking about New York. A state who has laws that are designed to produce defaults and iffy behavior.
Remove "nail and mail" service and the protection of the sabbath laws(11&13) from New York and the cream of the process servers will rise to the top. This would result in a better quality process server who could then charge more for their services.
Just my 2¢.
Keep up the good work Jeff!