Key Figures Download on FTC Discussion on Process Servers and Legal Collection Issues

A lengthy discussion about process servers was one of the more interesting and unexpected items to come out of last week’s Federal Trade Commission roundtable (“FTC Collection Litigation Roundtable Sees Lively Debate on Legal Issues,” Aug. 7).

The roundtable, held at Northwestern University in Chicago, followed up on the FTC’s February 2009 report Collecting Consumer Debts: The Challenges of Change – A Workshop Report, which recommended that the debt collection regulatory system in the U.S. should be reformed and modernized (“FTC Proposes Significant Changes to FDCPA in Workshop Report,” Feb. 27). The report also announced regional roundtables to further discuss issues surrounding litigation and arbitration practices in the accounts receivable management process, last week’s event in Chicago being the first. The next will be at the end of September at a still undetermined location in northern California.

The participants from the collection industry, consumer advocacy, the judiciary and academia, debated over several different points, but one area they were in general agreement on is that the collection process often faces a hurdle when it comes to process servers.

“The issues and topics [discussed at the roundtable] were not surprising; we were well aware of them ahead of time, but some of the discussion on process servers was unique,” said Rozanne Anderson, executive vice president and general counsel for ACA International. “They don’t fall under the Fair Debt Collection Practices Act (FDCPA). That’s like fitting a round peg into a square hole.  They’re not collectors, they’re here to uphold due process. The judiciary and the process serving community should meet to address these concerns at the local level.”

The issue of process servers’ role in the collection litigation process came to the forefront between the time the FTC panel was announced and it was held. In late July, New York Attorney General Andrew Cuomo announced a lawsuit against 35 law firms and process servers that sought to overturn some 100,000 judgments against consumers in that state over improper service.

A few of the panelists recommended licensing process servers, which Andersen said would be a good idea. But rather than legally imposed licensing, a better idea would be for the process serving industry to meet with the local judiciary and resolve any concerns at that level. Andersen stressed that these issues should be resolved at the local level, not the national level.

Among ways the process server industry could better meet the concerns of the collection industry, consumers and the judiciary would be to keep logs, use cell phone cameras [to show proof of delivery] and take other steps to ensure the proper people are served with collection and related notices, Anderson said. “We want the correct people served, otherwise it’s a waste of everyone’s resources. Communication is the key.”

One item that Andersen thought was overlooked at the Chicago roundtable was that it is a long time before litigation starts against debtors. But much of the discussion sounded like some of the roundtable participants thought that the litigation started right away, according to Andersen, who plans to address her concerns in official comments filed with the FTC. Comments on the issues addressed at the roundtable can be filed until Sept. 30.

Joel Winston, associate director of the FTC’s division of financial practices, also mentioned that the issue of proper process serving is an important one, pointing out that a couple of judiciary panelists brought up the issues as part of their concern in dealing with these cases.

“Proper notice is part of due process,” Winston said. “It was interesting to hear what the judges have to deal with on a day-to-day basis [a large backlog of collection cases].

“I think that the roundtable gave us deeper understanding of some of the issues,” added Winston, who declined to be more specific. “It gave us some ideas of where to go next.”