Technology is Modernizing Process Serving

This from InsideArm, an accounts recieveable managment association that caters to the consumer debt collection indsutry...

The industry’s leading process service companies are now deploying sophisticated technology and mobile devices to add substantive evidence that legal documents are properly served and that collections agencies and attorneys are providing defendants proper notice of legal proceedings. says Steve Carrigan of ABC Legal

http://www.insidearm.com/opinion/technology-is-modernizing-debt-collection-process-serving/ 

What do you think?  Is all this monitoring of process servers a good thing?   Later this month a process serving standards summit will be held in Denver to discuss the possible adoption of minimum industry standards for process servers serving consumer debt collection matters.   View the proposed standards here. http://www.processservingstandards.com/ 

by Jeff Karotkin

Process Servers Thrown Under the Buss?

This afternoon National Public Radio (NPR) did a story on so called "Debtors Prison".  The story describes how some creditors  are employing the threat of Debtors Prison to enforce consumer debt.   NPR appears to cover the issue fairly.  In response to the NPR story InsideARM (online Accounts Receivables Management resource for Collectors) pointed out that NPR used an anecdotal example to highlight a very complex issue. 

The InsideARM writer defending creditors/collectors and in the process attempted to divert blame for part of the problem by suggesting that Process Servers are part of the core problem.   Below is the quote from InsideARM story.

“Regulators and ARM industry decision makers have long known that the issue of process serving in collection suits needs to be addressed. The FTC held extensive hearings on the matter two years ago, and some states have moved to put their own rules in place to prevent such warrants from being issued.”

The link in the quote above is to a story InsideARM wrote in 2009 entitled "Key Figures Download on Process Servers and Legal Collection Issues".  

To listen to the NPR Story: 

 

Jeff H. Karotkin

Los Angeles, Ca

213 915-6235

jeff@karotkin.com

Facebook group: http://www.facebook.com/#!/groups/serviceofprocess/

Twitter: http://twitter.com/#!/SOPLF

New York Process Servers Granted Partial Restraining Order Against New Regulations

For those of you interested in or are following the developments in the city and state of New York as it relates to the Sewer Service fallout, the Department of Consumer Affairs (DCA) for the city of New York has published the new regulations that impose additional requirements on individual process servers and process serving agencies. 

Needless to say the New York State Professional Process Servers Association (NYSPPSA)  has mobilizing its members in an effort to minimized the impact of the proposed and adopted rules over the course of the last year.  To that end, NAPPS too has offered its support and financial assistance.  Due in part to the generous contributions NAPPS made financially (approximately $50,000.00) NYSPPSA was able to retain a law firm to file a restraining order in an effort to block or at least temporarily stop the implementation of the new regulations. 

Today NAPPS announced the following:

The New York State Professional Process Servers Association (NYSPPSA) was granted a partial restraining order on March 21 to allow the Association and the City of New York to continue negotiations over new regulations for professional process servers within the city limits.

For the full press release please click here.

If you are interested in reading the current version of the regulations I encourage you to visit the DCA website for a complete description of all the requirements.  The following are links to all the new reg's and the forms the DCA has posted on their website. 

New York City Licensing Law and New Rules
License Application for Agencies
License Application for Individuals
Process Serving Agency Background Information Form
Process Server Individual Background Information Form
Roster of Process Servers
Roster of Process Serving Agencies
Surety Bond Model Template
List of Bonding Companies
Excel Spreadsheet for Maintaining Electronic Records
Compliance Plan Affirmation
Process Server Individual Trust Fund Enrollment Form
Child Support Certification Form
Granting Authority to Act Affirmation

I went through them the other day and found myself wondering will the small and mid-sized agencies survive. Depending upon whether you are getting a license as an agency or an individual, there are as many as fourteen (14) forms to complete, hundreds if not thousands of dollars to be paid, bonds in the amount of 10K or 100K to obtain and countless new reporting requirements to comply with.  As if that were not enough, this version of the regulations do not even deal with the proposed GPS or electronic tracking requirement that the DCA will likely implement later this year.

In my humble opinion these regulations impose a significant challenge and/or barrier for everyone impacted but will most severely impact the solo  agencies and mid-sized agencies as well as independent process servers.  So much so, that unless NYSPPSA successfully stops or changes many of these requirements many of those folks will find themselves unable to comply and as a result will likely be forced out of business.  

As is typical in situations like this, those that created the current problem that resulted in these new regulations are not going to be the ones who suffer the consequences. 

posted by Jeff Karotkin

Evasive Subject Served via Facebook

In yet another example of how social media is creeping into every aspect of our lives, last month Australian Court in Adelaide ordered that the social networking site Facebook be used again to serve legal documents on an alleged father in a child support case.

This is the fourth instance of Facebook being allowed/ordered for the Service of Process that I am aware of. Australia, New Zealand and Canadian judges have all signed orders allowing a defendants to be served by posting the Notice of the Action to the defendants Facebook account.

Clearly judges around the world see social networks as being at least as reliable a means for giving notice if not more so than publication when all other methods have failed. I have to admit that I would agree that in certain circumstances service of process via social-networks or by other electronic means makes more sense than service by publication.

I would not dismiss these recent developments as being a fad or a trend. They are important and I believe they demonstrate that the courts and our customers are more and more willing to consider alternate manners of service that only a few short years ago where unthinkable.

As I write this post I am researching a ruling from the Supreme Court of India that appears to have ruled that Service of Process via email is now an acceptable manner of service for certain case types.

Stay tuned, more to follow.

FTC Final Report of Debt Collection Industry

FTC Issues Report on Reforming Debt Collection Litigation and Arbitration; Recommends Steps to Protect Consumers and Repair a Broken System

Process Servers are called Out as Part of the Broken System.   The Report Recommends Four Steps to Help Insure Proper Notice.   The Recommendations though well meaning, will only serving to make the act of service of process more cumbersome and expensive.  

They will not stop those that chose to break the law regardless of the rules and regulations.   

A new Federal Trade Commission report concludes that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to improve efficiency and fairness to consumers.

The report, “Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration,” reflects information gathered at roundtable discussions the FTC held throughout the country in 2009, as well as public comments and the FTC’s experience in debt collection matters. The roundtables followed a February 2009 report that identified some concerns with debt collection litigation and arbitration, but concluded that more information was needed about certain debt collection litigation and arbitration practices before further recommendations could be made.

The Commission therefore recommends state and local governments consider making a variety of reforms to service of process, pleading, and court rules and practices to increase the ability of consumers to defend or otherwise participate in debt collection litigation.

The FTC’s 2009 report found that debt collection litigation raised concerns about collectors failing to properly notify consumers of suits they have filed, collectors filing suits based on insufficient evidence of indebtedness, courts frequently granting default judgments against consumers who do not appear or defend themselves, collectors seeking to recover on debts beyond the statute of limitations, and banks freezing funds in bank accounts that are exempt from garnishment by law. In its new report, the Commission’s principal recommendations to address these concerns in litigation are:

States should consider adopting measures to make it more likely that consumers will defend themselves in litigation, decreasing the prevalence of default judgments.

Service of process may be inadequate or improper for many reasons. For example, process may fail to reach the consumer if it is delivered to an old or otherwise incorrect address or it is delivered to the wrong person, such as someone with a similar name. Some process servers may simply not serve the consumer but falsely assert that they have done so.

States should require collectors to include more information about the alleged debt in their complaints.

The FTC committed to closely monitor debt collection arbitration and evaluate whether creditors and arbitration forums provide consumers with meaningful choice and a fair process. The Commission also said that, as appropriate, it will report its views on new debt collection arbitration models to policymakers, industry, consumer groups, and the general public.

The FTC believes that reforms such as those discussed in the report should be made to ensure that the debt collection litigation and arbitration systems adequately protect consumers without unduly burdening the debt collection system, which helps to keep credit prices low and helps to ensure that consumer credit remains widely available.The Commission vote to issue the report was 5-0. Commissioner Julie Brill issued a concurring statement in which she urged Congress to enact a temporary ban on the mandatory arbitration of consumer debt collection disputes. “Such a ban should remain in place until the arbitration process can be shown to be fair, transparent, and as affordable as traditional litigation, and until consumers have a meaningful opportunity to opt out of pre-dispute arbitration without losing access to the credit services they seek,” she said.

Many consumer advocates and judges who adjudicate debt collection cases stated that inadequate or improper service occurs frequently. One local official reported that her agency’s comprehensive investigation of process servers in New York City revealed that “many are not performing service. They are filling out false affidavits of service. They are not going to the addresses. They are not sufficiently checking the addresses.” A Chicago judge explained similarly that one of his colleagues had conducted a “spot audit” of one process server and found that he “claimed to be in areas thirty miles apart in the Chicago-land area within minutes . . . . And we [asked,] ‘Is he Superman?’”

Nevertheless, the very high rate at which consumers do not appear and the service of process problems documented in some jurisdictions give the Commission a sufficient basis to conclude that efforts to improve service of process in debt collection litigation would benefit consumers in many locations.

An electronic version of the report text is available at http://www.ftc.gov/os/2010/07/debtcollectionreport.pdf

Are You Liable For Your Process Server Under FDCPA?

By Tomio Narita, Simmonds & Narita LLP


Consumers often assert FDCPA claims against collectors based upon alleged misstatements or misconduct by process servers while serving a state court summons and complaint. Thus, consumers may claim a process server was rude or abusive at the time of service, causing them to suffer emotional distress, or that a process server made false statements about the debt. These allegations are not sufficient to impose liability on the collector under the FDCPA.


For the rest of the post please click here.

Collectors and Process Servers Impacted by New Regulations in New York

The New York City Council adopted and published a new set of rules governing Debt Collectors that became effective April 24, 2010.

These new rules were promulgated by the same body that took on Sewer Service in New York that resulted in arguably the strictest regulations on private process servers in the United States.

Normally I would not write about rules effecting the collectors in New York, but these rules among other things place strict requirements on the collectors to maintain records of the activities of the process servers they contract with.

The following are the relevant sections of the new rules in New York City that will have an impact of process servers that work for debt collectors covered by these rules:

(3) A record of all cases filed in court to collect a debt. Such record shall include, for each case filed, the name of the consumer, the identity of the originating creditor, the amount claimed to be due, the civil court index number and the court and county where the case is filed, the date the case was filed, the name of the process server who served process on the consumer, the date, location and method of service of process, the affidavit of service that was filed and the disposition for each case filed. Such record shall be filed in a manner that is searchable or retrievable by the name, address and zip code of the consumer and the creditors who originated the debts that the debt collection agency is seeking to collect.

(4) The original copy of each contract with a process server for the service of process, and copies of all documents involving traverse hearings relating to cases filed by or on behalf of the debt collection agency. Such records should be filed in a manner that is searchable by the name of the process server.

The entire rules can be found at the following link: http://www.nyc.gov/html/dca/downloads/pdf/debt_collection_agency_law_rules.pdf

New York AG Shuts Down Another Process Serving Agency

The NY state Attorney General’s office has shut down a process server company that repeatedly claimed in legal affidavits that its employees had made proper service of legal documents to thousands of consumers when in fact it had not.


The Attorney General Office entered into a settlement requiring Brockport-based We Serve It For You Process Serving Agency, LLC, operated by Joanne Marie Coy, John Coy, Theresa Buehler, and Wesley Converse, to immediately cease operations and cooperate with ongoing investigations. The business and its owners must also pay fees, costs, and penalties totaling $10,000 and John Coy must surrender his notary public commission.

The AG’s office began investigating We Serve It For You in 2009 as part of an ongoing probe into debt collection lawsuits.

“The toxic business practices of this company impacted individuals across New York State,” said Attorney General Andrew Cuomo. “People need to have trust in the legal system, and that’s why we are banning this company and its owners from serving legal documents to the people of New York.”

The Attorney General’s investigation determined that those documents were regularly signed and mailed to John Coy, who would notarize them without witnessing the signature. From 2007 to 2009, We Serve It For You served approximately 54,000 complaints and maintained a database detailing each service. The Attorney General’s Office and the Unified Court System determined that:

On more than 1,100 occasions, We Serve It For You process servers claimed to have made service or service attempts at two or more places at the same time.

On more than 700 occasions, We Serve It For You process servers claimed to have made service or service attempts before they even received the documents to serve.

On tens of thousands of occasions, John Coy notarized the signatures of We Serve It For You process servers when he did not witness the signatures.

Through the agreement with Attorney General’s Office, We Serve It For You and its operators are permanently barred from having any legal or beneficial interest in any business involving the delivery or service of legal documents. The business will permanently cease all activities and dissolve.

We Serve It For You and its operators are also required to cooperate with the Attorney General’s ongoing investigations into illegal debt collection practices.

The settlement follows recent action against another process server, American Legal Process (ALP), which engaged in a similar fraud and caused more than 100,000 consumers to have costly judgments entered against them without the chance to respond or defend themselves in court. Aside from a civil suit and criminal prosecution against the owner of ALP, Cuomo’s office is seeking to have more than 100,000 default judgments that were caused by the faulty service overturned.

The NY AG Press Release can be found here

NYC cracks down on process servers with new law passed today 3-25-10

Process Servers in New York City have been given notice that a new law is coming that will regulate them at a level that is was unthinkable a year ago. If the Mayor of New York signs the law process servers will be forced to do the following:



• Process servers must pass an exam showing they understand the law


• They also must electronically log their attempts to serve papers, using wireless or GPS, and keep those records in a database for seven years


• The legislation requires independent process servers to file a $10,000 surety bond


• The legislation requires companies to file a $100,000 surety bond


No longer is the process servers affidavit of service good enough in New York. All of this is thanks American Legal Process who allegedly dumped (sewer service) as many as 100,000 summons and complaints.


Business Week story here.

Process Server Pleads Guilty to Fraud, Faces 1-Year Prison Term

The owner of a Long Island process serving business that put thousands of New Yorkers at risk of default by failing to notify them that they had been sued pleaded guilty Friday to felony fraud, New York Attorney General Andrew Cuomo announced Friday.

William Singler, the president of Lynbrook, N.Y.-based American Legal Process, will receive a jail term of one year for the Class E felony of first-degree scheme to defraud. [Read the criminal complaint (pdf).]

When Singler was arrested in April, his attorney, Corey Winograd of Winograd & Winograd in Manhattan, told the New York Law Journal that his client acknowledged that some of his process servers had not done their job, but claimed his client had not been aware of what was happening.

"He trusted those process servers," Winograd said last spring. "We now know today that some process servers breached that trust."

But in an appearance Friday before Acting Supreme Court Justice Alan L. Honorof of Nassau County, Singler admitted he had signed phony affidavits of service, swearing that court papers had been served on defendants in debt collection suits even though he knew many of his employees had broken the law.

Winograd, in an interview after the plea, said his client is

"taking responsibility for what occurred at his company and the actions of the many process servers who worked for American Legal Process, and he's looking forward to putting this episode behind him and moving on with his life."

As a result of Singler's fraud, many defendants had costly judgments entered against them, according to a statement by Cuomo.

Cuomo said Singler's crime

"impacted lives and caused financial hardship for thousands of New Yorkers,"

many of whom had their bank accounts frozen, their wages garnished and liens put on their homes.

Still pending is a civil action in Erie County against Singler and American Legal Process.

Filed in April, the suit, Cuomo v. Zmod Process Corp., dba American Legal Process, 4228-09, contends that between January 2007 and October 2008, Singler and American Legal Process

"persistently and repeatedly failed to serve New Yorkers in the manner prescribed by law, and have filed, or caused to be filed, thousands of false affidavits of service representing that service was proper."

During this time, there were 13,040 instances in which 55 servers reported they had attempted to deliver papers to a defendant before receiving the documents, according to the felony complaint against Singler.

And on 3,512 occasions, employees of American Legal Process claimed they tried to serve documents, but in fact they would have to have served different defendants in separate locations at the same time, Cuomo said.

Employees also claimed to have made process-serving attempts that would have required them to drive more than 10,000 miles in a single day.

In addition to the civil and criminal actions against Singler, Cuomo brought suit in July against dozens of law firms and two debt collectors seeking to vacate 100,000 defaults throughout New York.

Filed in Erie County Supreme Court on behalf of Chief Administrative Judge Ann Pfau, the suit seeks to vacate all default judgments where the only evidence that a defendant received service notifying him of being sued was based on an affidavit from American Legal Process, Pfau v. Foster & Garbus (pdf), 2009-8236.

The parties are working to resolve the case, according to a spokesman for the Unified Court System.

Under CPLR §308, servers must try to deliver papers three times before being allowed to mail a copy of the suit or "nail" a copy to a defendant's door.

Singler is due to be sentenced on March 24.

Meanwhile, in a separate federal case filed at the end of December, a group of civil rights advocates accused a network of debt collectors, including the law firm of Mel S. Harris and Associates, of civil racketeering, deceptive business practices, and violating federal debt collection law.

Sykes v. Harris and Associates, LLC, 09-civ-8486, was filed on behalf of a class of defaulting lawsuit defendants by the Neighborhood Economic Development Advocacy Project, MFY Legal Services Inc. and the law firm of Emery Celi Brinckerhoff & Abady. The suit claims the defendants used fraudulent debt collection practices to obtain tens of thousands of default judgments against New York residents.

The defendants in the case could not be reached for comment.


Republished with License 01-20-2010 - ALM - Noeleen G.Walder

William Singler Owner of American Legal Process Guilty of Fraud

Singler plead guilty 1-15-10 in Nassau County Supreme Court to one count of first degree scheme to defraud, a class E felony. He is expected to be sentenced on March 24.

Singler admitted that he knew some of his employees didn't properly serve court papers the company was hired to deliver.

Singler broke the law and then lied to cover it up,” said Attorney General Andrew Cuomo. “It is not a victimless crime, but one that impacted lives and caused financial hardship for thousands of New Yorkers. Many had their bank accounts frozen, their wages garnished, and liens put on their homes, all because they were denied their day in court.”

It is being reported that he may get one year in jail. If true, I for one am outraged that someone that is responsible for such a terrible crime committed against thousands of people would only get a year in jail.

He single handedly tarnished the image of professional process servers around the world. I believe that the private process serving community needs to speak up and demand that he and all those that helped perpetrate the alledged crimes be held to account for their actions.  That includes the collection law firms that are alleged to have looked the other way when ALP claimed to have had such a high successful service rate.

Anyone in the collection food chain knows the type of results that ALP claimed to be achieving was impossible.

Full story http://bit.ly/5KSarS

Class Action Lawsuit Alleges "Sewer Service" by Collectors & Process Servers

A New York Times article dated 12-31-09 chronicles the story of a New York family that learned of a judgment against them only after the Marshall's office attempted to enforce the judgment.

In October 2009, a New York consumer rights law firm filed lawsuit alleging violations of the Fair Debt Collections Practices Act in the United States District Court of New York in the Southern District case number 09-CIV-8486 (DC). The complaint was filed against a variety of defendants representing the entire collections chain starting with debt buyers, the law firms they retained and the process serving agency they contracted with.


This case stems from the alleged massive fraud that the NY Attorney General's office is currently investigating. The AG's office filed its own lawsuit earlier this year. The AG's office is attempting to have approximately 100,000 judgments thrown-out because they allege the process serving agency responsible for serving the complaints committed "Sewer Service".


If you want to be blown away by what allegedly took place you need to read the AG's complaint against the process serving agency and approximately 35 collection law firms. In one instance it is alleged that a process traveled over 1000 miles in one day serving complaints all over NY State, many at the exact same time they claimed to have served other defendants.


On December 28, 2009, the complaint filed in the federal court was amended by the plaintiffs making it a Class Action lawsuit. The plaintiff firm claims it could represent over 100,000 victims of judgments won since 2006.


Needless to say this saga continues to cast a negative light upon Debt Buyers, Consumer Collection law firms and Process Servers nationwide. One can only hope that those that are responsible for the alleged fraud in New York are brought to justice.

Final FTC Roundtable Discsussion to be held 12-4

The final Federal Trade Commission Roundtable Discussion is being held later this week in Washington D.C. The event is open to the public and can also be viewed live via webcast.

Once again the roundtable includes a session focused on the Service of Process. The process serving profession is fortunate to have Larry Yellon on the panel representing NAPPS. The session dealing with the service of process is on the agenda first thing the morning of 12-4-09.  The published topics related to the service of process are as follows:

For detailed information about the session, the speaker bios, the full agenda and instructions on how to view the session live via webcast please visit the follow FTC webpage.

Service of Process Best Practices Adopted in Michigan

I found the following is text in a written public comment submitted by the National Association of Retail Collection Attorneys (NARCA) sent to the FEDERAL TRADE COMMISSION. The FTC is currently holding a series of roundtable discussions dealing with Protecting Consumers in Debt Collection Litigation and Arbitration matters.

“Because process servers are exempt from the definition of a debt collector´ under the FDCPA, the Federal Trade Commission has no authority over the mechanism of service of process in state court collection proceedings. NARCA recommends that the procedures for regulating service of process remain at the state court level. NARCA is open to working with the Federal Trade Commission to develop best practices and procedures on a state level for service of process. A model embodying this approach as has recently been implemented by the Michigan Creditors Bar Association. NARCA also believes that state court and legislatures may have a role to play in promulgating rules and procedures, including licensing requirements, for private process servers”.


For the most part I find the statement to be a positive attempt by NARCA to address a problem whether real or perceived with private process servers and the role they play in the collection of consumer debt cases.


I find it interesting that NARCA suggests the formation of Best Practices for the Service of Process and cites the Michigan Creditors Bar Association’s creation and implementation of Best Practices for Process Servers.  I am concerned that the Best Practices do not appear to have been drafted with any input from the private process serving profession.


To illustrate this point, the Michigan Creditors Bar Association Best Practices and the Michigan Court Officer, Deputy Sheriff and Process Server Association have entirely different sets of Best Practices for the Service of Process.


Michigan Creditors Bar Association Best Practices


Michigan Court Officers and Process Servers Best Practices


On its face it does not appear that they collaborated in any way. Having read them both I don’t have a problem with either set, it is a shame they did not work to create one set of best practices.


I am also concerned that there is nothing in the NARCA statement suggesting that the FTC or NARCA work with actual process servers in addressing the issues raised during the roundtable discussions. Fortunately, NAPPS and other process servers associations are starting to take a more proactive role in these discussions.


The NARCA comment also suggests regulation of process servers at a state level.  I am no fan of government regulation of the process serving profession. That said I recognize that if the private process servers ignore this issue it is likely government regulations will be forced upon us. Given the option, I would rather see the profession step up and make an effort to be a part of any regulatory solution that might result in an effort to create an outcome that we can live with.


I am interested in your thoughts.