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Gutter Service in CA?

The following article was forwarded by one of our members to Vice-president Jayne Rauser, along with questions regarding GAPPS representation of Georgia  process servers. Because of the issue of “gutter service” raised by the article, and the issues raised by our member’s questions, we believe the article and member’s questions are worthy of publication.

Following the article and our member’s questions is President Tamaroff’s reply.

Bay Area residents sue process servers for failing to deliver lawsuits

May 24, 2012 | Bernice Yeung, California Watch

Brian Turner/Flickr

In February 2011, a process server working for ABC Legal Services filed a document with the Alameda County Superior Court saying he had personally served Fremont physical education teacher Matthew Walker with a lawsuit over an unpaid $2,340.76 personal loan.

In his proof of service, process server Richard Lowry stated that he had handed the papers to Walker at the Fremont Unified School District offices at 3:37 p.m. Feb. 15. But Walker says that he never took out a personal loan, and he was six miles away, coaching a basketball game at Thornton Junior High School, when he supposedly was served. A crowd of students and parents could attest to his whereabouts, he said.

Walker is one of 16 residents from Alameda, Santa Clara and San Mateo counties who recently sued ABC Legal Services. The residents filed 14 separate lawsuits in San Francisco federal court between June 2011 and April 2012, claiming that the firm’s process servers lied about serving court papers in debt collection cases. The lawsuits accuse ABC Legal of the “ignominious and shoddy practice of ‘sewer service,’ ” a colloquialism that stems from reports that some process servers throw court documents into sewers instead of delivering them. Individual process servers are also named in these lawsuits.

The process-serving industry in California is largely unregulated, which can leave consumers vulnerable to unscrupulous servers who often are paid per transaction. There is no systematic way to gauge how widespread improper service is, industry experts said.

San Jose attorney Fred W. Schwinn, who filed the suits against ABC Legal – one of the country’s largest process-serving businesses – estimates that there are “hundreds, if not thousands,” of these kinds of cases in California. His review of three months of ABC Legal records found multiple instances in which process servers claimed to be in two places at the same time.

In Walker’s case, B.H. Financial Services, a Los Angeles company that buys portfolios of consumer debt and then tries to collect on them, contacted the teacher about two years ago. Walker explained that his only debts were a car payment and student loans.

Walker also told B.H. Financial representatives that he had been a victim of identity theft, and he said he sent the collections company a copy of the police report. Nevertheless, the company filed a debt collection lawsuit against Walker in January 2011. ABC Legal was hired to serve the papers, and the case was assigned to Lowry.

“It’s a disturbing feeling that you’re being sued over something, and if you’re going to be sued, you want to be sued over something you know about and you did,” Walker said.

An attorney for B.H. Financial, Arash Khakshooy, declined to comment. ABC Legal, its attorneys and Lowry did not respond to repeated requests for comment.

ABC Legal’s website says its process server audit team “analyzes GPS coordinates, time/date stamped photos, process server routes and travel time, protecting you from the embarrassment and compliance risk of fraudulent service.”

According to the Federal Trade Commission and collections industry representatives, the number of debt buyers like B.H. Financial that are attempting to collect on aging consumer debt – sometimes called “zombie debt” – has grown in recent years. These debt buyers purchase portfolios of uncollected debt from credit card companies, banks or other debt buyers for far less than face value – often pennies on the dollar.

Some collection companies rely on increasingly aggressive tactics, including lawsuits. A 2010 report [PDF] issued by the FTC concluded that “certain debt collection litigation … practices appear to raise substantial consumer protection concerns,” including reports that lawsuits had been filed without enough evidence of who actually owns the debt, had been filed against the wrong person or had not been properly served.

A default judgment is entered against a debtor who fails to respond to a collection lawsuit. In the most extreme cases, consumers have had wages garnished and bank accounts levied – even if they had not been properly served and were not aware that a debt collection case had been filed against them.

Critics of the debt collection industry say litigation coupled with improper service allows debt collectors to game the system at the expense of consumers who are struggling to make ends meet.

Debt collection is a competition to “get money from people who don’t have any,” said Scott Maurer, a supervising attorney at a Santa Clara University law school clinic that works with low-income debtors. “Whether they owe the debt collector or not, the Constitution says that everyone has a right to due process and the right to appear in court to contest the debt.”

Collections industry representatives said litigation is a costly last resort, and they also have an interest in curtailing improper service.

“Making sure that consumers receive the information they need and are required by law to receive is a top concern for the industry,” said Mark Schiffman of ACA International, an association of credit and collection professionals. “We don’t do process serving; we hire process servers, and when we hire someone, we want to make sure they’re doing their job.”

In California, those servers need to meet only minimal requirements. Prospective servers must register with the county clerk where they live, undergo a criminal background check and post a $2,000 performance bond. No training is required.

Process servers also generally are exempt from being sued under the federal Fair Debt Collection Practices Act [PDF]. Additionally, state law provides immunity for virtually any statement made in connection with a lawsuit, including proofs of service filed by process servers.

Improper service can be difficult to prove in court, said Santa Clara County Deputy District Attorney Victor Chen, who handled a criminal case involving faked service of lawsuits in small-claims court.

“Short of having the documents that show it’s factually impossible to be served, the process server’s word is going to win out every time,” he said. “A crooked process server who is willing to bend the truth makes it very difficult. It’s rife for abuse. They know that more times than not, they will get away with it.”

Tony Klein, founder of the San Francisco-based Process Server Institute and author of several books about the industry, said servers sometimes are paid as little as $8 to $10 per service, which can create an incentive for some to lie. ABC Legal charges debt collection companies or their lawyers between $59 and $64.50 and pays its process servers between $16 and $19 per successful service, according to documents produced during legal discovery.

“Part of the problem, and I’m not saying that this justifies bad service, is that the business of process serving is to just send paper out with a server and see how cheap they can do it,” Klein said. “Some companies out there pay a flat rate to drive the cost down – , they don’t pay for non-service or not-founds and they are inducing people to fudge.”

Klein added that he thinks improper service is the exception, and process servers sometimes deal with evasive and violent litigants. “There is service going on all day long, and it’s done properly,” he said.

Litigants who believe they haven’t been properly served can file a complaint with the local district attorney’s office or the state attorney general, which can pursue criminal cases against the company or individual server. The California attorney general’s office said it does not provide information about complaints that have been made to its office.

The civil lawsuits filed by Walker and other Bay Area residents have moved forward because they have claimed in federal court that ABC Legal and its process servers should not receive exemption under the Fair Debt Collection Practices Act because they were not legitimately serving lawsuits.

Schwinn, the lawyer representing the residents, said during a time that a San Jose woman was hospitalized, ABC Legal server logs showed she was personally served at her home. In another incident, the wife of a debtor was reportedly served last February at the couple’s Santa Clara home, even though she had been dead since November 2010.

“A quick review of the logs shows that there were a number of purportedly personal serves at residential addresses between midnight and 5 a.m.,” Schwinn said, “and that there are a number of instances of what I would deem ‘Superman service,’ where a process server puts down two different addresses at the same time, as if they were in two locations at the same time.”

According to ABC Legal server logs, one server claimed to serve two people simultaneously on 18 occasions during a three-month period in 2010; another server logged 16 serves between midnight and 5 a.m. in a seven-month period during 2010 and 2011.

Schwinn said that although these cases specifically involve debt collection, they also address a larger, underlying legal issue.

“The legal system completely breaks down if these unregulated people don’t do their job,” Schwinn said.



Rick Heimerich’s Comments:

I attended the Certified Process Server class this past weekend and was impressed by the level of professionalism that most in the class seemed to have.  I have only been doing this for a couple of years and appreciate that there is a professional organization who’s goal seems to be maintaining the integrity of the process serving business and I am considering membership for this reason.  That being said, I recently ran across an article that I wanted to bring to your attention.  As I read the article, I began wondering where GAPPS loyalties would lie.  I have copied and pasted the article so as to be able to highlight and bold certain sections.

I highlighted the section from the founder of the Process Server Institute because he identifies a problem but doesn’t offer any solutions to the problem.  If GAPPS gets what it wants as was discussed this past weekend and we are considered Certified Professionals in Georgia, does GAPPS represent and stand behind me or big box companies like ABC Legal Services?  ABC is not alone in their business practices.  It seems to me in my short time in the business that we are not competing with the Sheriff, we are competing with each other by seeing who can do the job cheaper, not better.  I have never “sewer served” a paper and would not consider doing so.  My personal ethics tell me to “do it right or don’t do it at all”.  However, unethical servers, and I have met a few, can undercut my prices by not doing the job in a professional and competent manner.  A professional should be able to command a higher fee for a job well done but this does not seem to be what big box companies are looking for.  I am well aware that GAPPS has no control over a big box company but, as you can see, one company can have detrimental effects on an entire industry.


The issues you raise are very complicated, requiring a little background.

Unfortunately, the situation in California is not an isolated instance. Just a few years ago, the New York Attorney General conducted an investigation of many instances of “sewer service” in New York by subcontractors of one large New York City process serving company. More recently, a similar situation arose in Florida involving another large process serving company. The Federal Trade Commission (FTC), became so concerned that it conducted several “roundtables” around the country, inviting representatives of the various entities involved (collection attorneys, consumer protection agencies, judges, lawyers, etc.). As president of NAPPS I was invited to be on the San Francisco Roundtable. Then NAPPS’ Vice president Larry Yellon (presently NAPPS President) represented the profession at the Washington, D.C. Roundtable. The FTC recognized NAPPS as the representative of all process servers throughout the country. The roundtables dealt with only the papers served pursuant to the Fair Debt Collection Practices Act (FDCPA). The concern was that so many defendants were coming in and trying to re-open defaults against them, contending they were never served with the summons and complaint. Like I said, the California incident is not isolated. Additionally, most of the problems concern collection accounts. These are accounts that have been written off by the original creditor and sold and resold many times for pennies on the dollar, so that when the debtor is sued, he/she does not even recognize the entity listed as the plaintiff. In such situations, many debtors simply ignore the summons until they are being garnished several years later. By that time, many debtors may not even remember being served.

Process servers are exempt from the FDCPA, but they are also victims. The firms that purchase debts for pennies on the dollar insist on paying bottom dollar for everything, including service of process. We are not talking about a few papers; we are dealing with millions of collection accounts. So, the firms involved in this “industry” work with only a few large process serving companies. They pay very little. In New York for example, payment to the process serving company was about $25 per paper. The process serving company then would contract with process servers all over the state for as little as $5 or $10 per paper. As pointed out by Tony Klein (awarded the NAPPS MacDonald Award just a few years ago), this leads to corruption of the process. These process servers getting $5 or $10 per paper are not members of an association. In states without rules, like New York and California, they have no statutory guidance for their conduct. They know that in the vast majority of cases, the defendant will default. Therefore they weigh the risks and decide to engage in “sewer service”.

The California Association of Legal Support Professionals (CALSPRO) is an association that represents process servers and other legal support professionals in California. CALSPRO is set up to support large companies in California. They do have individual members as well (less than 200 in a state that has thousands of process servers). My experience reflects that CALSPRO responds to legislation that adversely affects process servers, rather than engaging in a proactive way to propose and encourage legislation that raises the professional requirements of the profession. This may be a reason that CALSPRO, although having been in existence (previously as CAPPS) for many years, has a relatively small membership in a state that has a multitude of process servers.

Now to the specific issues you raise. Regarding Tony Klein, it is unfair to say he did not offer any solutions. We don’t know what Tony told the reporter and what the reporter might have left out of the article. Tony did the original draft of what is now the NAPPS’ “Best Practices” that GAPPS has adopted. Tony is recognized as one of the top authorities on process serving in the country. He has written a book on the subject. He is always available to respond to questions raised by process servers throughout the country. It is understandable that the news media would go to Tony for his thoughts on the subject of “gutter service”.

What is unfortunate is that the writers of the article did not go to CALSPRO, or even NAPPS. I wrote a letter to each member of NAPPS Board of Directors noting this point, suggesting that there is something wrong when journalists do not interview representatives of the state association that contends it representatives of California process servers, or even the National Association. As a past president of NAPPS I recognize that much of NAPPS’ strength comes from its development of state associations and vice versa. NAPPS has played no small role in the development of GAPPS.

Compare the situation in California with that of Georgia. In Georgia, GAPPS representatives have worked for over 8 years to get legislation that forces process servers to raise their level of knowledge and professional integrity. The actions of GAPPS representatives reflect that GAPPS was never intended to benefit these representatives, but was always for the higher purpose I have described. Indeed, in addition to the time devoted to pursuing the legislative goal, a great deal of money was donated by these same individuals. You can see in the pre-certification training that the instructors are volunteers who are not getting paid for their efforts. One rule we have is that, other than to identify ourselves, we do not even mention our companies during the sessions.

Our speaker in the February training was House Judiciary Chairman Wendell Willard. Without the Chairman on our side, we would still be struggling. This last time our speaker was Chief Judge Scott. We are now known by the entire Georgia Judiciary, including all the judges, the Judicial Council (chaired by the Chief Justice of the Supreme Court), and the Administrative Office of the Courts. For the first time, we have the courts on our side regarding certification and they are planning a Uniform Superior Court Rule for certification by the courts that will trump the sheriffs’ plan to keep certified process servers out of their counties. We have found an insurance agent that will give each of our members a substantial discount for the required surety bond. Our efforts are designed to have all process servers in Georgia join GAPPS. That will make GAPPS an even stronger force than the sheriffs. We will be able to pursue even more legislation that benefits, not just the process servers, but all Georgia citizens.

It is true, as you say, that we are competitors. However, that does not make us enemies. There is enough work for all of us, and price competition is a small part of the equation. We have process servers whose prices will range from $50 to over $100 for the same service. While there are some attorneys who are concerned only with price, there are many more who want to have a professional relationship with their servers. And, there is good reason for all of us to want the prestige that comes with certification and the respect that brings from the legal community. As Judge Scott pointed out, certification will justify even higher charges. GAPPS cannot dictate prices. But, with the support of our membership, we can dictate professional conduct of our membership. I believe that, over time, all process servers will find it worthwhile to join GAPPS. When that happens, even the “big box companies” will be forced to pay reasonable charges if they want a process server in Georgia. Already, one of these companies has been in contact with us to insure that they retain the services of only those servers who get certified. I am sure they will get a break on price because they forward a substantial amount of work. However, I do not believe certified process servers will lower themselves to a level that demeans themselves and the profession. I am very excited about the future of the profession in Georgia.


Georgia Association of Professional Process Servers

[email protected]

Surety Bond information for Process Server Certification Program

We are pleased to announce that GAPPS has an agreement from a surety company to provide the $25,000 surety required for certification at a substantially reduced price, and without the need for a credit check. All that will be required is the name, address and telephone number of the applicant, along with payment for the one-year premium of $100.00 and evidence of being a member of GAPPS. Absent membership in GAPPS, the yearly premium will be substantially more. The savings will be more than enough to cover the cost of GAPPS membership.

As we have previously explained, it is suggested that requests for the required background check be placed on hold. A couple of our members have been checking the procedure that the sheriffs will follow, and at this point it appears the sheriffs are not prepared to fulfill their statutory obligation. We will be sending letters to each sheriff asking what procedures have been established to comply with the statute. In the meantime, we expect that the procedure for appointment by the courts will be in place by the end of July, and we recommend such certification as the best course of action, avoiding the problems inherent with certification by the sheriffs.

For those of you who want to take advantage of the surety discount and are not yet GAPPS members, you might want to join now. There will be no savings on membership dues by waiting until July, and the dues will only cover this year. Additionally, we will be required to provide the surety company with evidence of membership for those applying for the surety. Additionally, by joining now you will be receiving e-mail updates regarding the certification program, the status of certification by the courts and other matters relating to present and future appointments.

$75 is the cost of the annual GAPPS membership and you can find the application here on our website.

As far as how to obtain the surety, if you are a member, you will receive the application from GAPPS, once the company has provided that to us. We hope to have it sometime next week.

Paul Tamaroff, President