BUFFALO, N.Y. (WIVB) – Thousands of New Yorkers have until Thursday to join a $59 million settlement of a class action lawsuit filed in the Manhattan federal courthouse. The lawsuit is entitled Sykes v. Harris.
It is estimated more than 7,000 Western New Yorkers were victims of unscrupulous debt buyers who used the courts to rake in nearly a billion dollars in bogus default judgments. Most of those judgments were filed in Buffalo City Court.
Stephen Cho, an attorney with the Western New York Law Center, said the New York City based debt buyers, LR Credit, or L-Credit, bought up millions of dollars of old debt.
“A debt buyer is not a lending institution or a bank in the traditional sense. They exist just to make money. They purchase old charged off debts for pennies on the dollar, and then they turn around and attempt to collect the entire amount.”
To ensure LR Credit got something for its money, the company hired a law firm to sue those debtors, who rarely showed up in court to defend themselves. The reason they failed to show, according to Cho, was because they were unaware they were being sued, and in many cases it was because the firm responsible for serving the court papers did not.
It’s called “sewer service” and Cho said it cost two of his clients thousands of dollars after their paychecks were garnisheed.
“The process server made sworn statements to the court saying that yes, the defendant was given notice when in fact, one–at the time–lived in a completely different state, and the other defendant, she moved to a different address, so they were not given notice.”
Cho took their cases back to court, and had the clients’ wage garnishments removed. Now they can get some of their money back through the class action settlement.
The debt buying industry is, for the most part, unregulated business and New York seems to be the epicenter, said Cho.
“It is incredibly lucrative because they are purchasing debts, charged off debts, for pennies on the dollar.”
New York Times reporter Jake Halpern has written a book on the subject called Bad Paper, and said in 2015 with News 4 the debt buying industry needs to be reined in.
“There definitely are some bad actors in this business that are knowingly breaking the law, and using whatever means necessary.”
If you believe you were among the hundreds of thousands of New Yorkers who might have a claim in the Sykes v. Harris settlement, or you received a form and threw it away, you only have until Thursday, April 7, to act.
Information is available at the Sykes Class Action Settlement website, and there is a link to be included as a plaintiff.