NY Attorney General sues to vacate thousands of improperly obtained debt collection judgments

Andrew M. Cuomo, the New York Attorney General, filed a lawsuit last week that named 35 debt collection law firms as defendants. The suit alleges that over 100,000 default judgments obtained by these debt collectors may have been obtained by fraud because the consumers were not properly notified of the lawsuits and given a chance to defend themselves. According to the suit, the debt collection law firms all used the same process server, American Legal Process, to serve the lawsuits. The suit alleges that ALP “repeatedly and persistently” falsified sworn affidavits that it had given proper notice of the lawsuit to consumers. There are multiple allegations of ALP process servers serving two or more people in different places at the same time. Since the consumers had no notice of the lawsuits, they did not respond to them. This resulted in thousands of court ordered default judgments. The debt collection law firms used these judgments to garnish the consumers’ bank accounts and wages. The average amount seized from each consumer was over $5,000.00.

The lawsuit is silent about whether the collection law firms knew about the falsified affidavits. My guess is that they didn’t, but I also imagine that they didn’t ask too many questions about ALP’s practices and procedures as long as their services kept the money rolling in.

New York Times: N.Y. Claims Collectors of Debt Used Fraud (via CL&P blog)