Reuters reports that, last month, over 100,000 potential plaintiffs were permitted to pursue a class action against a New York-based debt collector and law firm.
The claim is that both Leucadia National Corp and the Mel S. Harris law firm were using ‘sewer service‘ to win default judgments in cases against debtors.
Sewer service is the practice of failing to properly serve a litigation notice to a defendant. Then, when the defendant fails to appear in court, the collector proceeds to apply for a default judgment – a judgment which the collector will almost always win.
Sewer service leaves consumers at a distinct disadvantage. Because the debtor was not properly served, they did not know they needed appear in court in the first place. In many cases, sewer service can lead to bank account seizures, wage garnishments, and damaged credit scores.
The 2-to-1 decision to allow the class action was made after both the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) notified the US Circuit Court of Appeals that any other ruling would hurt the efficacy of the Fair Debt Collection Practices Act (FDCPA), an act that has been protecting consumers from unfair and unlawful debt collection tactics since 1977.
Along with the CFPB and the FTC, the AARP and National Consumer Law Center are also supporting the plaintiffs in their claim.
Quoted by Reuters is the plaintiff lawyer, Matthew Brinckerhoff, noting the importance of this class action:
“The problem of unscrupulous debt collectors is nationwide… This class action provides a framework to obtain relief for a large number of victims.”
We’ve talked about sewer service before, here on CreditLaw.com. Sewer service is a violation of the FDCPA and your consumer rights. If you too have been a victim of sewer service, contact a consumer attorney right away.
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