New York Attorney General Andrew Cuomo will be filing a lawsuit today against one of the largest servers of debt collection legal action notices for failing to effectively notify debtors that legal action is pending against them, according to a media report.
The New York Times, citing unnamed officials in Cuomo’s office, reported Tuesday that the attorney general will file a civil suit against American Legal Process of Lynbrook, N.Y. Cuomo’s suit will allege that American Legal did not properly serve debtors with papers that would have apprised them of legal action.
Cuomo’s office has yet to confirm the suit and American Legal could not be reached.
The case, according to the paper, stems in part from a report issued by non-profit law firm MFY Legal Services. An MFY study found that one-third of debt collection lawsuits in New York City with values under $25,000 were filed by only seven different law firms. In those cases, less than 10 percent of defendants appeared in court. The most common result in the cases was a default judgment against the debtor.
Lawyers at MFY claim that it is in the best interest of creditors and debt collection law firms to make sure debtors do not receive notice of legal action. One lawyer told The Times that “sewer service” – simply discarding court notices with no attempt to deliver them to consumers – is a part of the business model of collection lawsuits.
It was immediately unclear what Cuomo’s office will be seeking from American Legal in the suit and what, if any, charges will be brought.