The “Great Recession” of 2008 was the source for a number of deviations from the traditional collection processes.  One case previously discussed related to “robo-signing” of affidavits which were submitted to court in order to get default judgments.  A second case related to usurious interest being charged on debt that was purchased by a Jacuzzi salesman in Minneapolis.  This case relates to a concept that flourished in the years following 2008: namely “Sewer Service.”  

A collection lawsuit is commenced when the collector (the “Plaintiff”) has two documents—a summons and a complaint—served on the debtor.  The process of serving the summons and complaint is important and certain formalities must be followed:  1) the person delivering (serving) the papers must be over the age of 18 and must not be a party to the lawsuit, 2) after service is completed, the person serving the papers must sign and submit an affidavit which describes the manner of the process, 3) the service must be made on a party to the action (the defendant) or on an adult who resides in the home of the defendant. Once service is made, the defendant debtor, if he/she chooses to contest the lawsuit, has twenty days to file the response in court. 

To cut corners, some process servers engaged in “sewer service,” where they simply threw the summons and complaint in the trash and then signed an affidavit that they made “personal service” on the defendant debtor.  The lawyers would then unknowingly submit the fraudulent affidavits to court and make a motion for a default judgment.  Because the defendant debtor never received the summons and complaint, he/she was unaware that a lawsuit was even filed and accordingly, judgment was entered.  

The first time the defendant debtor knew that a lawsuit was filed was when his or her bank account was frozen, the wages were garnished, or the credit rating ruined. 

Two states took action against “sewer service.”  In New York, Attorney General Andrew Cuomo took action against American Legal Process.  In Minnesota Attorney General Swanson took action against T.J. Process Service.

One of the Minnesota victims testified by affidavit that she was not aware of the debt, nor of the lawsuit against her, until she tried to withdraw money from her ATM and found that her account had dropped below zero.  

One of the process servers at the company, Jeremy Umland, signed affidavits of process when the person never lived at the address.  For instance, Umland claimed to serve:

  • A 73-year-old man at a home he had lost to foreclosure three years earlier
  • A woman at a home address at which she had not lived for 11 years
  • A person at her home address when records showed that she was at work

Swanson also alleged that the process serving company had process servers pre-sign blank pieces of paper and then fed the pre-signed papers through a printer to add details of the service.  The company’s personnel then notarized the affidavits falsely claiming that she witnessed the signatures. 

Swanson was successful in getting the bad judgements vacated.  She then drafted and secured enactment of legislation that required a debt buyer, not just the process server, to prove the right person was served with the right documents and that the documents set forth the correct amount owed.  The goal of the legislation was to make it so that bill collectors could not “win” in court unless they adequately proved their case in court following an opportunity for the debtor to be heard.