In November 2015, New Economy Project and allies reached a groundbreaking $59 million settlement in a class action lawsuit charging a network of debt collectors with civil racketeering (RICO), deceptive practices, and violations of federal debt collection law. Under the settlement, believed to be the largest of its kind, approximately 353,000 New Yorkers had their debts eliminated, and class members received tens of millions of dollars in monetary relief. The settlement also led to the unprecedented vacating of approximately 170,000 debt collection default judgments — at a total face value of $800 million.
New Economy Project filed the lawsuit in 2009, along with co-counsel MFY Legal Services (now Mobilization for Justice) and Emery Celli Brinckerhoff & Abady LLP, later joined by the National Center for Law and Economic Justice. The lawsuit alleged that the defendants engaged in widespread fraudulent debt collection tactics, including “robo-signing” (filing false affidavits with the court) and “sewer service.” Defendants obtained automatic judgments against tens of thousands of New Yorkers each year, which they used to collect money by restraining people’s bank accounts, garnishing their wages, threatening to seize their personal property, or pressuring them into unaffordable payment plans.
We brought the case on behalf of low-income New Yorkers who contacted New Economy Project’s NYC Financial Justice Hotline. The defendants were the debt collection law firm of Mel S. Harris and Associates; Leucadia National Corporation, a multi-billion dollar publicly-traded holding company, and various debt-buying subsidiaries; and Samserv, a process serving agency.
- The Nation, How Debt Collectors Ruin Lives (Dec. 2, 2015)
- The New York Times, “Victims of Debt Settlement Scheme in New York Win $59 Million in Settlement” (Nov. 13, 2015)
- The New York Times, “Suit Claims Fraud by New York Debt Collectors” (Dec. 30, 2009)
- Buffalo News, “Debt-collection settlement from class-action lawsuit could benefit more than 7,000 in Erie County” (Nov. 17, 2015)
Key filings and court decisions:
- Decision re: Defendants’ Motion to Dismiss
- Class certification decision
- Appellate Brief
- 2nd Circuit Court Decision