Significant debt-collection settlement in New York

One of the examples from the aforementioned Times editorial is worth noting in its own right: Last Thursday, a $59 million settlement was filed in a class action against shady debt collection practices on behalf of tens of thousands of New Yorkers who had their wages garnished or their bank accounts frozen.

Specifically, the suit attacked a practice known as “sewer service.”

That meant debt collectors failed to serve a notice of complaint but filed a false affidavit claiming that the notice had been properly served and that they had evidence of the money owed. People with the alleged debt, unaware of the complaint, did not show up in court, setting off a legal proceeding under which the collector almost always won a default judgment against them.

The Times has the whole story here.

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