Oregon has become the next in a line of states to pass legislation regulating debt buyers. Oregon bill HB2356, initiated by Oregon Attorney General Ellen Rosenblum, passed both the House and Senate prior to legislative adjournment on July 7.
The bill’s new debt buyer provisions purport to ensure protections for Oregon consumers, making it unlawful for any debt buyer to:
- Bring any legal action when the statute of limitations prohibits the collection of the debt;
- Bring any legal action without proper documentation which includes information showing (a) the original creditor’s name; (b) a way to contact the new debt buyer; (c) the last four digits of the original credit’s account number; (d) the date and the amount of the last payment to the original creditor; and (e) an itemized list of charges and fees imposed on the account; and
- Fail to provide a receipt to the consumer after receipt of each payment.
Under the new law, consumers may also demand that the debt collector provide documents substantiating the debt. The debt buyer, or those collecting on the debt buyer’s behalf, must cease all collection activity until the requested documents are produced to the consumer within 30 days. Otherwise, the debt cannot continue to be collected or sold to another debt buyer.
This law also creates the first stand-alone licensure requirement for debt buyers in the nation. Most states have generally classified debt buyers as “debt collectors” or “collection agencies” for the purpose of licensing. Oregon now classifies debt buyers as a separate entity for regulatory purposes.
In a press release, Rosenblum lauded the new law, stating that “[m]any Oregonians legitimately do owe debt, but if their debt is sold to a debt buyer, who then sues to collect the debt, the consumer should be able to easily identify the source of the original debt. This new law is about transparency, fairness and justice for all in the consumer marketplace.”
Oregon now joins Colorado, West Virginia, Maine, and Massachusetts in recently passing legislation restricting allegedly predatory collections practices. Since Oregon now also classifies debt buyers as a separate entity, this may pose a challenge to those agencies collecting in Oregon that maintain a debt-buying arm. Will debt buyers have to retain separate corporate entities in Oregon? Will a debt buyer have to be licensed as both a collection agency as well as a debt buyer? These issues may be an unintended consequence of this new law and will no doubt raise questions as the new bill impacts the market.
We will continue to monitor and report on further developments.