Debt buyers pay, on average, only 4 cents on the dollar for huge portfolios of delinquent debt. The price is so low because banks sell the debt portfolios subject to explicit contractual warnings that the information they sell is not accurate and should not be relied upon. Additionally, they don't sell any documentation to allow anyone to verify the claimed amounts. The only information a debt buyer purchases is an unprotected Excel spreadsheet with a debtor's personal information and an approximate amount allegedly due. This is inadequate to permit the debt buyers to prove they own the debt, are suing the right person, and for the right amount.
The case is Sykes v. Mel Harris, LLC, et al., on appeal from the Southern District of New York. Ms. Sykes and other plaintiffs filed a class action lawsuit claiming that Defendants, Mel Harris, LLC, a debt collection law firm, Leucadia Credit Recovery, a third party debt buyer who purchases delinquent debt only from other debt buyers, and Samserve, a process server that allegedly frequently fails to serve notice of the lawsuit on the alleged debtor but files falsified affidavits of service with the court, are engaged in a scheme to fraudulently obtain default judgments in violation of state and federal laws, including the Fair Debt Collection Practices Act and the Racketeer Influenced Corrupt Organizations Act.
SOURCE AARP New York
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