Have You Been Sued for Credit Card Debt? Your Fake Relative Might Know.

Collectors claim they serve people who don’t exist, yet regulators rarely bar repeat offenders from the industry.

Last April, Sam Gordon, a Harlem resident who works with people experiencing drug addiction, got a notice in the mail: Thousands of dollars were about to be garnished from his wages.

“I’m living pretty much paycheck to paycheck,” said Gordon, a 61-year-old immigrant from the former Czechoslovakia who asked not to use his real name. “So that kind of amount would have put me in a situation that would have been not sustainable.”

About five years prior, a mental health crisis followed by a serious bike accident had put Gordon out of work for a few months, leaving him unable to pay his bills. In 2021, Capital One sued him for $3,620 in credit card debt — but he says he didn’t know that until last year.

Capital One was legally obligated to inform Gordon of the lawsuit. The law firm working for the credit card company, called Selip & Stylianou, had hired a process server to give him the court papers. The server claimed in a court filing that in October 2021, he went to Gordon’s apartment and hand-delivered the documents to a relative of his named Damien.

“I live alone,” Gordon told New York Focus. “I don’t know any Damien.”

Because Gordon didn’t show up to court, Capital One automatically won the case, allowing the company to garnish his wages. (Neither Capital One nor Selip & Stylianou responded to requests for comment.)

Lawyers have a term for when process servers lie about delivering papers to defendants: sewer service. As a result, creditors can win court orders, called default judgements, that allow them to garnish the wages of defendants who don’t know they’ve been sued.

These default judgments “can throw a person, can throw a family into financial turmoil, all because the process server didn’t properly notify the consumer that there was a lawsuit against them,” said Ted Mermin, executive director of the University of California, Berkeley Center for Consumer Law and Economic Justice.

Sewer service has plagued New York City for decades, and though the city implemented nation-leading reforms in the 2010s to combat it, a New York Focus investigation has found that fraudulent practices persist, limited regulatory enforcement doesn’t always deter bad actors, and some repeat offenders continue operating. To understand the issue, reporters reviewed court records, analyzed complaints to regulators, and spoke with consumer attorneys across the city.

Court data further suggests that many people don’t know about cases against them: About 83 percent of people sued in New York City courts over consumer debt in recent years did not respond to the lawsuits. In the same time period, courts issued tens of thousands of default judgments each year. Consumer experts said the numbers point to a widespread problem.

Servers, who are often employed by third-party agencies, have to submit affidavits to the court confirming that they successfully reached a defendant or made the required attempts. But sometimes the affidavits describe impossible scenarios: A server claims to have served two addresses miles apart within minutes, or to have served a person who doesn’t exist.

“This is a very big problem,” Mermin said.

It’s a hard one for the state to solve, because of the large case volume and number of actors involved, said Daniel Wilf-Townsend, a professor at Georgetown University Law who works on consumer issues.

“If it were only one bank doing it, or only one company doing it, that would be a little bit easier,” he said. “As a widespread thing happening in the background all the time, it can be much harder to police.”

New York City civil courts handle tens of thousands of consumer debt lawsuits every year. Creditors, and in many instances the third-party companies that purchase the debt they’re owed, file huge volumes of nearly identical cases in a process that Wilf-Townsend has termed “assembly line litigation.”

The business is dominated by a few law firms. Selip & Stylianou alone filed over 10,000 lawsuits in New York City in 2023.

The volume tilts the system in the favor of creditors, experts say, because the courts are overwhelmed and don’t have the resources to strictly enforce rules meant to protect defendants. Meanwhile, Americans are in more debt than ever before, and credit card debt and late payment rates are on the rise in New York City.

Serving defendants — a standard part of any civil proceeding — gives them a chance to hire a lawyer and challenge erroneous debt collection attempts. But in many cases, the court documents never reach the defendant. Sometimes that’s because servers make an honest mistake, such as delivering papers to an old address. In other cases, it’s because the server commits fraud.

New York has attempted to curb sewer service for years. “Despite more than 40 years of periodic attention to deficiencies in the process server industry, sewer service is alive and well,” the New York City Bar Association noted in 2010. That year, then-New York Attorney General Andrew Cuomo moved to vacate more than 100,000 judgments due to sewer service, though the effort sputtered after he failed to find sufficient evidence of fraud.

Also that year, the Department of Consumer and Worker Protection, the city agency that regulates process servers, imposed new requirements: Servers had to take a licensing test, maintain electronic logbooks of their service, and carry a GPS tracker.

Most consumer advocates interviewed by New York Focus said they thought the changes had led to minor or even substantial improvements in service. But some said the problem has worsened, because regulators and judges tasked with monitoring it became less vigilant as a result.

“It didn’t get better,” said Shanna Tallarico, formerly the project director of the consumer protection unit at the nonprofit New York Legal Assistance Group. “The lies just changed.”

The group brought a class action lawsuit in 2020 against two process servers, the agency that employed them, and the law firm that used them after Tallarico found suspicious patterns in their claims of service.

Tallarico found instances where each server claimed to have served dozens of people at more than 40 different apartments in fewer than three hours. Out of hundreds of attempts at service, they claimed to have served a defendant’s relative 94 percent of the time — a highly implausible rate, the lawsuit said. The servers visited the correct locations to maintain their GPS records, according to the lawsuit, but failed to actually serve anyone. The case eventually reached a $1.35 million settlement in 2023 that barred the servers from future work in the industry and barred the agency that hired them from working with servers who have previously been disciplined for fraudulent service.

It’s hard to know just how often New Yorkers are improperly served. But data from the state Office of Court Administration points to a widespread problem. From 2019 to 2023, defendants only responded to about 17 percent of the 366,000 consumer credit lawsuits filed in the city’s civil courts.

“There is likely a range of factors, beyond service issues, that contribute to the low response rate in consumer credit lawsuits,” said OCA spokesperson Al Baker in a statement. “Some consumers might make a deliberate choice not to respond because the debt is valid and they have no defense, and therefore see no benefit from answering. And perhaps more consequentially, many people with consumer debt cannot afford a lawyer and don’t know how to find one.”

Consumer advocates had a different read on the data.

“In my experience, it’s super rare for people to get a court document and just ignore it, because people are afraid of the consequences,” said Elena Rodriguez, an attorney with the New Economy Project, an advocacy group that works on economic justice issues. “It’s serious to be sued, so for only 17 percent of people to answer … I think it points strongly to sewer service.”

Between 2019 and 2024, the courts issued roughly 152,000 default judgments against consumers.

The federal Consumer Financial Protection Bureau has received hundreds of complaints against the chief debt collection law firms in New York, with dozens focusing specifically on sewer service.

“Creditor Pressler & Pressler obtained judgment against me by serving papers to my foreclosed property while I had been homeless. I never received information on court date or subsequent judgement,” one alleged debtor wrote in June 2016.

Multiple individuals complained that servers claimed they had given papers to non-existent family members, and that they did not receive notice of a lawsuit or judgment before the debt collector attempted to garnish their paychecks. (The complaints in the CFPB database have not been independently verified.)

New York Focus also reviewed the cases of 11 people who called the New Economy Project’s New York City Financial Justice Hotline for help and had apparently not been served properly. Most learned about the lawsuits against them only after a default judgement had been issued. In some cases, the servers’ affidavits contained clearly inaccurate physical descriptions. One claimed to have served a woman, though the defendant was a man; another claimed to have served a white person when the defendant was Black. A defendant in one case was on an airplane when the affidavit of service alleged he was handed court papers.

“We typically encounter sewer service, on average, at least once per hotline shift. It’s really, really common,” said Rodriguez, the New Economy Project attorney.

“I have so many clients who are not being served properly today. It’s across the board,” said Mary McCune, an attorney at Manhattan Legal Services who represents low-income New Yorkers in consumer cases.

Just hiring a lawyer can sometimes be enough to get a lender who doesn’t want to spend time and resources fighting a case to drop it. After getting his wage garnishment notice in the mail, Gordon, the Harlem resident, quickly sought legal assistance to get the default judgement overturned, and Capital One eventually abandoned its case.

Creditors sometimes sue for more than they are owed, or for debt that has already been paid off. If left unchallenged, they may garnish wages for debt that consumers don’t really owe.

“You wind up with big judgments against people that half the time have no basis in fact,” said then–New York state Chief Judge Jonathan Lippman in 2014. That year, he announced reforms requiring creditors to provide more evidence when suing for unpaid debts and a new court policy to mail defendants a notice of the lawsuit against them.

Creditors claim that sewer service is extremely rare. Properly serving people is in creditors’ best interest, said Donald Maurice, an attorney who represents creditors and a debt buyer lobbying group.

Fraudulent service leaves lenders with unenforceable judgments, and state and federal law allow both the government and private actors to go after creditors engaging in it. “It’s regulatory risk, it’s civil litigation risk, and it’s also a reputational risk,” said Maurice.

The high rate of default judgments instead reflects the fact that people don’t see any point in fighting a lawsuit when they know they owe the debt, he argued. “To say that anyone wants to design their program so that the consumer doesn’t know about it happening until they get served with a wage garnishment is ridiculous.”

To become a licensed process server in New York City, one has to pay a $75 fee, get fingerprinted, and pass an exam on their first or second try. The city Department of Consumer and Worker Protection, or DCWP, issues the licenses and is tasked with ensuring servers follow laws and regulations.

DCWP can charge rule-breaking servers with violations, which come with fines of up to $1,000 each.

The agency can also suspend a server’s license or decline to renew it if they break the rules, although a DCWP spokesperson said they generally only resort to that measure “for the most serious violations, such as sewer service.”

DCWP suspended or declined to renew licenses 242 times between 2019 and last fall, according to publicly available city data. (In 47 of those instances, the license was not renewed because the server failed their exam.) That includes servers working not just in consumer debt cases but across the city’s court systems.

Sometimes servers are fined for more minor infractions unrelated to sewer service, like failing to maintain proper records of their service attempts. DCWP has also fined people for sewer service in recent years.

For example, in 2021 the agency issued a $10,000 fine to a server named Panagiotis Antiaris for engaging in sewer service and suspended his license for 10 months. In 2024, DCWP fined server Timothy Botti $4,875 for sewer service and suspended his license for three years.

The agency randomly audits process servers who work in the city’s housing courts, but no such proactive enforcement exists for consumer credit cases.

Consumer attorneys say the agency’s efforts are too infrequent and the penalties are too negligible to ensure compliance with the rules.

Fines are “a slap on the wrist,” said Rodriguez of the New Economy Project. “They get to continue serving even when they’ve been found to have engaged in wrongdoing.”

In addition to carrying a GPS device, the agency requires process servers to keep electronic records and take time-stamped photographs when they serve someone. Since those rules were imposed, “we have received fewer reports of sewer service,” a DCWP spokesperson told New York Focus.

In Gordon’s case, the server did take a picture of the outside of his apartment building, but there’s no evidence that he ever went inside.

DCWP does not investigate servers in consumer cases unless someone files a complaint with the agency or a process server is found to have broken the rules after a “traverse hearing,” a court proceeding wherein a judge investigates whether a party was properly served.

If the server can’t prove they did their due diligence to deliver notice of the lawsuit, the judge can dismiss the case. But judges rarely use the tool: Between 2019 and 2024, New York City judges only held 656 traverse hearings out of the 434,000 consumer credit cases filed in those years.

Baker, the OCA spokesperson, said that number “is not particularly informative” because it lacks information about how often defendants requested those hearings and whether they had a legitimate basis for doing so.

Perhaps no case better illustrates the limits of DCWP and court enforcement than that of process server Benjamin Lamb.

Lamb worked at a Queens barbershop until 1999, he told New York Focus, when a family friend told him he could get a job “serving people papers.” He did two days of training, and has worked as a server for the past quarter-century.

In that time, he has been fined at least $2,125, had his license suspended twice, and been found to have engaged in improper service in multiple traverse hearings. He’s also been sued at least two times.

Lamb was among the defendants in a 2015 class action lawsuit alleging massive and deliberate sewer service. The case resulted in a $59 million settlement and nearly 200,000 default judgments getting tossed out.

The evidence in that case showed that on at least 66 occasions between 2007 and 2011, Lamb claimed to have served people at two different locations at exactly the same time.

These were clerical errors, Lamb told New York Focus.

“If I’m typing and I forget to switch a couple of things, then guess what?” Lamb said. “The only thing you can hold me guilty for in a situation like that is not reading the affidavit before I signed it.”

He said that 66 claims of fraudulent service was actually low relative to the total number of service attempts he made during that time.

“You got 60 out of tens of thousands,” he said. “The affidavits were done manually, so there were mistakes.”

Three attorneys and the process serving agency who perpetrated the fraud were barred from the industry as part of the settlement. But Lamb and the other servers were required only to take measures to prevent sewer service in the future.

He continued to work over the next decade, while regulators issued fines and suspended his license, apparently aware that he continued breaking the rules.

Last year, Lamb was sued again.

That case began in 2023 when Selip & Stylianou sought to collect a debt from Erika Wilson, a 34-year-old former elementary school teacher who lives in the Bronx. The firm hired a process server agency, J&E Process, to serve Wilson, and that agency hired Lamb.

Lamb claimed in an affidavit that he served a roommate of Wilson’s named Chante Wilson on June 8, 2023. But there is no one named Chante Wilson in Erika’s life, according to a federal lawsuit that Wilson later filed against Lamb, J&E Process, and Selip & Stylianou. (J&E Process did not respond to a request for comment.)

This wasn’t the only impossibility in Lamb’s records. Wilson’s attorney, Matthew Schedler, investigated 39 of Lamb’s other cases from around the same time. He found that on multiple occasions, Lamb had attested to having served multiple defendants in timespans that seemed impossible given the distance between the defendants’ houses. And not once had Lamb said he actually found the defendant. Instead, in every case, he claimed to have given the papers to someone else at the address.

Lamb, who still works as a server today, told New York Focus that Wilson’s lawsuit and all claims of fraudulent service are “bogus.”

“I’m giving you something you don’t want, so the best way to get out of it is to act as though you never received it,” he said. “That’s definitely what’s behind every complaint.”

https://nysfocus.com/2025/06/10/new-york-sewer-service-debt-collection-fraud

(http://www.autoadmit.com/thread.php?thread_id=5738793&forum_id=2#49021650)