A lawsuit that debt collectors should be worried about

Written by Biloxi

A New York judge has individuals another method to sue debt collection company that debt collectors should worry about as this could spread nationwide. From an opinion in a consumer class action case, Federal Circuit Court Judge Denny Chin, allow plantiffs in that case to sue debt collectors as being a criminal enterprise under Racketeer Influenced Corrupt Organization (RICO) and allow claims under the Fair Debt Collection Practices Act. The key for an individual to sue debt collectors under RICO is to have concrete information on the debt collectors and their business models as in the case of Monique Sykes, plaintiff. Here is the story from Daily Finance:

Well, Monique Sykes and the other plaintiffs claim that the defendants’ business model is as follows:




• Buy debt with little documentation that the debt is accurate.



• File lawsuits claiming personal knowledge of the debt but using robo-signed affidavits instead.

• Deliberately fail to tell the “debtor” that the lawsuit is pending (a practice called "sewer service").
• Get a “default” judgment against the debtor when she fails to show up in court to defend herself.
• Enforce the judgment, including by freezing the debtor’s bank account.





And why should the debt collectors be nervous from Judge Chin's decision? It is because this would affect law firms, a process-serving company and a debt-buying company that use debt collectors. Let's not forget whistleblower Linda Almonte's lawsuit against JP Morgan Chase for illegal credit card practices. The former JP Morgan Chase employee filed a whistleblower lawsuit with SEC that alleged Chase's records on customers' debts were false and the executives at the company knew customers' records were false and routinely robo-signed debt-related documents. In Ms. Almonte's case, like Ms. Sykes' case with debt collectors, banks, too, better worry that they don't get sued as a criminal enterprise.