A judge has set an interesting precedent, allowing a pack of skeevy debt collectors get sued under the RICO act, the Racketeer Influenced Corrupt Organization law.

The RICO act allows for increased criminal penalties and civil action against members and entities working together in a criminal enterprise. It was created to prosecute the Mafia but has been expanded to be used against the Hells Angels, Major League Baseball, and health insurance.

In this case a debt-purchasing company, law firm and process-serving company are accused of working together to snag borrowers with “sewer service.” This is where the process servers tell the courts they’ve given notice to the clients, but actually haven’t. Because that would give them more of a chance to fight back.

Since the clients usually don’t show up, it’s easy to get default judgments against them.

The class action, Monique Sykes vs. Mel Harris, is a case to watch in the battle against robosigners of all stripes.

Judge Allows RICO Suit Over Debt-Collection Tactics To Proceed [Forbes]
A Lawsuit That Dirty Debt Collectors Should Be Worried About [Daily Finance] (Thanks to Don!)

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