Oregon Debt Collection Bill Passes House and Senate

As of July 18, Oregon House Bill 2356 has passed both the House and Senate, and is now awaiting signature by the Governor. The bill establishes requirements under which a debt buyer or debt collector acting on a debt buyer’s behalf may bring legal action to collect a debt, details illegal practices, and specifies licensing requirements for debt buyers.

The full text of the bill can be seen here.

Regarding requirements to bring legal action in the collection of a debt, the bill establishes the following:

(1) A debt buyer that brings legal action to collect or brings legal action to attempt to collect purchased debt, or a debt collector that brings legal action on the debt buyer’s behalf, shall include in an initial pleading that begins the legal action:

(a) The original creditor’s name, written as the original creditor used the name in dealings with the debtor;

(b) The name, address and telephone number of the person that owns the debt and a statement as to whether the person is a debt buyer;

(c) The last four digits of the original creditor’s account number for the debt, if the original creditor’s account number for the debt had four or more digits;

(d) A detailed and itemized statement that shows:

(A) The amount the debtor last paid on the debt, if the debtor made a payment, and the date of the payment;

(B) The amount and date of the debtor’s last payment on the debt before the debtor defaulted or before the debt became charged-off debt, if the debtor made a payment;

(C) The balance due on the debt on the date on which the debt became charged-off debt;

(D) The amount and rate of interest, any fees and any charges that the original creditor imposed, if the debt buyer or debt collector knows the amount, rate, fee or charge;

(E) The amount and rate of interest, any fees and any charges that the debt buyer or any previous owner of the debt imposed, if the debt buyer or debt collector knows the amount, rate, fee or charge;

(F) The attorney fees the debt buyer or debt collector seeks, if the debt buyer or debt collector expects to recover attorney fees; and

(G) Any other fee, cost or charge the debt buyer seeks to recover; and

(e) The date on which the debt buyer purchased the debt.

The bill provides a lengthy list of illegal practices -- including the following, fairly detailed, account relating to medical debt:

(q) Collects or attempts to collect any debt that the debt collector knows, or after exercising reasonable diligence would know, arises from medical expenses that qualify for reimbursement under the Oregon Health Plan or under Medicaid, except that:

(A) The debt collector does not engage in an unlawful collection practice if the debt collector can produce an affidavit or certificate from the original creditor that shows that the original creditor complied with Oregon Health Authority rules barring payments for services that Medicaid fee-for-service plans or contracted health care plans cover; and

(B) For purposes of this paragraph, a prepaid managed care health services organization, a coordinated care organization or a public body, as defined in ORS 174.109, or an agent or assignee of the organization or public body, is not a debt collector if the organization or public body seeks to collect a debt that arises under ORS 416.540.

Finally, the bill outlines in extensive detail the requirements for submitting and having a licensing application approved by the Director of the Department of Consumer and Business Services.

According to the summary by the legislature, the bill becomes operative January 1, 2018, and takes effect on 91st day following adjournment sine die. (Editor's note: "Sine die" is Latin for “without a day”. The term is used to describe an adjournment when the date to reconvene is not specified, such as when Congress intends to leave town for the last time in a year.)

UPDATE: On August 2, 2017 Oregon Governor Kate Brown signed this bill into law.

insideARM Perspective

This legislation is yet another example of state activity regulating debt buyers and debt collection of debt buyer accounts.  insideARM has previously reported on some of this activity. See here and here for other examples. 

It is clear that the goal of this bill fits the national narrative regarding collection of accounts by debt buyers.  The mandate – give consumers more information! The buying and selling of consumer debt is confusing. The legislation enacted in Oregon is demanding more transparency for the consumer.  It is likely other states will follow this lead in the future.