Leveling the playing field for Oregon consumers
By Angela Martin of Portland, Oregon. Angela is a policy advocate for Our Oregon, a non-profit organization that works for economic fairness.
This is shaping up to be the year of the consumer in the Oregon legislature. Legislators are debating consumer protection bills aimed at helping families by protecting some of our most important assets: our homes, vehicles, income and tax returns.
On Wednesday, Oregon lawmakers voted in support of 3 of these key bills that will protect consumers during these rough economic times. Legislators—and Democratic leadership—deserve a big round of applause for taking bold steps to help level the playing field for regular Oregonians.
With their important votes, legislators acted to prevent homeowners from the next foreclosure crisis, moved to crack down on illegal and abusive debt collection practices, and gave consumers more protections against unscrupulous debt collectors.
Here’s what they accomplished so far:
Taming Abusive Debt Collectors
The House of Representatives helped to protect consumers from illegal debt collection practices by passing SB 328. The bill finally closes a decades-old loophole that gave the debt collection industry a special exemption from enforcement. The Department of Justice will now be able to enforce the law against unlawful debt collectors.
Passing SB 328 was a top priority for Attorney General John Kroger. Complaints about debt collectors have been in the top ten consumer complaints to the DOJ since 2001, with over 800 written complaints in 2008. Consumers have reported being harassed by debt collectors who call at all hours, use abusive language, and make threats of imprisonment. This is expected to get worse as the economy tumbles.
SB 328 will give the Oregon Department of Justice the authority to protect consumers by enforcing the laws we already have. This means putting a stop to the worst abuses and creating a strong deterrent against breaking the law.
The Senate passed SB 328 in February, and the bill now goes to the Governor's desk.
Also on Wednesday, the Senate passed SB 386, introduced by Senator Bonamici and co-sponsored by Senator Monnes-Anderson and Representative Holvey. As Senator Bonamici explained, SB 386 will stop the “sue first, ask questions later” tactics of aggressive bill collectors. It’s become an all too common practice for debt collectors to pursue debts that don't even exist, and the cards are stacked against consumers who are harmed by illegal debt collection practices.
SB 386 makes it illegal for a debt collector to attempt to collect a debt that they know, or have good reason to know, does not exist, and removes obstacles facing consumers who deserve to have their day in court.
The bill now goes to the house for consideration.
Preventing the Next Mortgage Meltdown
Homeownership is the cornerstone of the American dream and an anchor of financial stability for hardworking families. It’s old news to talk about the housing crisis, but the fact remains that risky loans have contributed to record high foreclosures. Predictions are that we will see 55 foreclosures a day in Oregon this year!
On Wednesday, the Oregon House passed House Bill 2188, which will take solid steps towards preventing the next mortgage meltdown.
HB 2188 will help prevent the same type of risky lending that got us into the current foreclosure crisis, by tightening lending rules around “negative amortization” loans. These loans have been especially risky contributors to the mortgage meltdown and the resulting financial crisis.
HB 2188 also provides homeowners equal access to justice when violations occur, ensuring that all consumers have the ability to protect themselves if they are victimized by unlawful lending practices.
Further, the bill requires that when a lender purposefully solicits business from people who speak a language other than English, the disclosures be translated to the language in which the sales pitch was made.
HB 2188 now moves on to the state Senate.
While the struggling economy continues to pose serious threats to the vast majority of Oregonians, it’s encouraging to see that there are so many leaders in this state who are willing to stand up for policies that will level the playing field for average consumers.
April 03, 2009
Posted in guest column.
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Apr 3, '09
How about rolling back the lengthened statute of limitations to sue on a deficiency claim in car repossessions? It once was 6 months to limit the abuses endemic in the auto industry. The practice goes like this: Repo the car, sell it cheaply in the private market to your buddy dealer, then sue to recover the deficiency. The legislature several years ago extended the statute to the contract limitation (6 to 10 years). Now, the unscrupulous dealer can wait in the weeds for the debtor to recover then sue for the deficiency. Obviously some protection is a good start, but much more is needed.
Apr 3, '09
Homeownership is the cornerstone of the American dream and an anchor of financial stability for hardworking families. It’s old news to talk about the housing crisis, but the fact remains that risky loans have contributed to record high foreclosures.
Let's just bear in mind that risky loans were the cornerstone of federal policy to push the American Dream. If "unlawful practices" include not granting riskier mortgage terms, then lenders are stuck in an impossible situation. Damned if they do, damned if they don't.
Apr 3, '09
I seems to me that we could avoid a future housing problem if we mandated a return to the 28/36 guideline and have a mandatory 5% down requirement.
Apr 3, '09
Something else that has to be done is to close the loophole on internal debt collections.
Apparently, the laws regarding what a debt collector can/cannot do specifically state that this is for outside debt collections. Many large companies have started an internal branch of the company to handle debt collections instead of hiring an outside company.
After being harassed by a collector who was obviously breaking the law (calling 20+ times per day, for instance), I turned them into the state and to the feds. Both told me they could not do anything because the company did its collections internally as opposed to hiring an outside firm.
The collectors themselves also confirmed that they knew what the law was and that their setup was such so that they would be exempt from the law.
As such, they could call several times an hour, every hour, morning til night. It didn't matter if you talked to them or not - they would continue the calls until their system showed the debt was paid. And because their system was slow, it could be a week or more after you paid it before their system showed you had paid.
There's nothing like missing a call from your doctor's office or child's school because your phone is tied up by a debt collector.
Apr 3, '09
Both 328 and 386 are mindless duplication of existing laws under the Fair Debt Collection Practices act first passed in 1966 and uupdated several times over the years. Perhaps instead of passing yet another law that isn't needed, the AG of Oregon and consumer protection activists would be better off educating Oregon consumers about their existing rights under FDCPA.
The most notable rights currently on the books:
3rd party debt collectors can not harrass or intimidate the debtor 9harrassment defined as more than one (1) call in a day.
Calls may not be before 8:00 am or after 9:00 pm
The debtor may challenge the veracity of the debt and request written proof that the debt is theirs. They can tell the 3rd party collector that any attempts to damage their credit while a debt is being verified will result in a violation of FDCPA.
The debtor can instuct the 3rd party collector, in writing that all contact with them at work and at home must cease. Continued contact also results in a violation of FDCPA.
State AG's ALREADY have the power and authority to address alleged violations of FDCPA. If a 3rd party collecion agency is found in violation, the first thing that occurs is the debt is wiped clean! The state is also able to levy fines and suspension of collection activities.
But thanks for trying anyway.....
Apr 3, '09
Kurt - valuable information, hope it is spot-on. I've found the DOJ to be helpful even when the complaint is not strictly in their purview. Dell computers specialize in a system that is geared to systematically humiliate and exhaust the customer in cases of faulty product. After one year of trying to get help on a lemon computer, my son's bday present, the DOJ finally forced Dell to at least give me 3/4 of what I paid. NOt fair, but more than they were ever going to do on their own. DOJ maintained a voluminous record of Dell's corporate model of purposive malfeasance even as they could not move against them (for reasons I do not really understand).
I've discovered that merely informing a bad actor that a case file has now been opened at the DOJ is sufficient to wrest better behavour from DNA that seems imperterbably incapable of basic decency in such matters!
Excellent point in distinguishing between third party and in-house collections as well. Good information to be used in many ways.
Apr 4, '09
There's a minor paper pushing point that never gets addressed, but I think it's important.
The sine qua non of consumer recourse, is the fact that corporations must apply to the Secretary of State for authority to transact business, in Oregon (exemptions aside). As it stands, the penalty for not satisfying the statue is a passive one; the entity may not bring or respond to an action in the state courts. There is no positive penalty, such as a fine.
In doing business here, I have found that 40% of the registrations are blatantly fraudulent. Make that 80% if you're talking non-profits. Most common, and the touchstone for consumers, is the registered address for service and registered agent. There are businesses all over Portland that you can never contact via their registered agent or address. Big, major businesses, like a clothing chain for twenty somethings with a Portland store at 82nd. That is not one bit different from using an assumed name to render personal services, to avoid legal service. It is time there were some positive penalties and that the Oregon Secretary of State was charged with validating, not just recording the information.
All consumer rights start with the right to know who you are doing business with, and how to contact and serve them. Until issues like this get addressed, this year's agenda leaves me unimpressed. Great. Lenders can't use predatory lending practices. And how do you bring a complaint, if they have filed bogus service information?
You use the additional registration information, that does have to be validated, that exists because they are a credit institution. That's the answer to the inevitable question about funding the SOS to do more. We have a number of side programs, to effectively overcome the systemic prob., addressing the registration of a number of sensitive business areas. Get rid of all that bureaucracy, and have the SOS do basic registration/validation/enforcement for all Oregon businesses.
This is also another reason why it is friggin' impossible to take seriously the perennial hand wringing about the budget. They obviously just aren't trying to do anything but pander to vested interests. Working dumb is why the state is always broke. To whit: if my statements are accurate, do you realize how many businesses are transacting business, while under administrative dissolution, and they have not paid their yearly renewal fee? If you were to say, hey, we're going to out you as an unregistered entity if you don't at least get out of administrative dissolution, do realize how much money that would be, overnight? You talk about what beer drinkers, and smokers and the stupid (lottery) should be ponying up... How about businesses that have been told by the SOS to stop and are still transacting business, that could get straight for $500?!?
I don't exaggerate. I just took a random stab, with the closest business to my house, a national sandwich chain that made some pitiful wolf commercials. It's a privately owned store, the owner lives in NE Portland. He last paid his yearly renewal 7 years ago, and has been in administrative dissolution for 6 years. Wake up. You can pass a health inspection, based on your hygiene, but have had your authority to transact business revoked by the SOS? You only have consumer protections to the extent that it is absolutely required- like people not falling over dead from salmonella- and that's it. From there on it's 100% pandering to business. This level of consumer rights is medieval, compared to other places I have lived, in the first world. Do you realize how many entities know this and never try to satisfy statute at all, knowing this? What per cent of Portland businesses are not registered with the City? A lot, and that's more revenue that is easily collected, that they only pursue passively, based on a complaint.
You ask the Health Department how it can not be a risk to serve food to the public when your business has had its authority revoked and I guarantee you will hear that they can not afford to check. It took me 5 minutes, and the fees would easily pay for it. That consumers continue to accept the explanation, is why you have a problem with consumer rights. You can't get a drivers license, almost, without documenting the oil level on the dipstick...insurance, taxes, all fees paid, personal documentation, etc. Meanwhile, a restaraunteur need not even have a legitimate business entity to pass a health inspection! Get real!
Apr 4, '09
Interesting point, Birdie. And was a linchpin in the Viagra Wars of yesteryear. Only the good actors, the ones you COULD find, got roughed up in court, and the bad actors continued on.
Standard corporate operating, to NOT provide you any place to apply the fulcrum's end. And, yes, the point is to service corporate interests.
White Egret Sister
Apr 4, '09
Angela - Great post. I believe this session has a chance to be the best pro-consumer session we've seen in a long time. A lot of that is because the chairs of the Senate and House consumer committees are just doing fantastic work - Sen. Bonamici and Rep. Holvey are true champs.
Groups like Our Oregon, OSPIRG and the Oregon Law Center also deserve praise - we have a nice coalition of legislators and pro-consumer groups that are sticking up for people when they need it the most.
A couple of things for clarity from the perspective of the Department of Justice. Jenni - you'll be glad to know that SB 328 includes ALL businesses that do debt collection - internal first party debt collectors as well as 3rd party debt collection agencies. So from now on, you'll be protected whether or not a business does their debt collection in house.
Kurt - I hate to say it - but your information about the impact of SB 328 and SB 386 is just wrong. Until the governor signs SB 328 into law, the Attorney General does not have the power to enforce violations of our state debt collection laws. Debt collectors were one of the few businesses that were not subject to our basic state fraud statute - the Unlawful Trade Practices Act - now that they are, the Department of Justice can bring suit to hold debt collectors accountable when they break the law. Our laws here were SO limiting that there are national lawsuits happening as I type where other Attorneys General are bringing suit against big debt collection companies for illegal practices and Kroger can't join those suits. SB 328 closes this loophole, and it really will make a difference in consumers lives. SB 386 stops debt collectors from being able to lie to consumers, pursue debts that don't exist, etc - that adds protections.
If people want to follow what the Attorney General's office is doing - please join our list at www.doj.state.or.us, and especially sign up for our Scam Alert Network where we give consumers tips to avoid being ripped off.
Ben Unger Oregon Department of Justice
Apr 4, '09
Ben - I have found that even when DOJ was constrained and could not help, they took the call, listened, advised and even in my situation, were willing to make a call and receive calls from the offending bully. I was appreciative. Without the kindness of DOJ, which was receiving call after call from Dell victims, I'd not have existed in the structure of the endless Hindi call center that is Dell. It will be nice when some laws change and there are teeth to gird the halo.
I was also on the "other side" of DOJ and FDA, but just b/c one side of the agency is operating politically as opposed to purely jurisprudentially, this does not mean that I am unwilling to experience the goodness and light, the strength of your agency.
Good to know you follow the blogs....
Apr 4, '09
Kurt Chapman: State AG's ALREADY have the power and authority to address alleged violations of FDCPA.
Not unless the State itself authorizes it, which, until this bill becomes law, is not true in the State of Oregon.
You see, Kurt, while the Federal government has some control over the States, it doesn't have complete control. Congress can give States enticements to pass certain laws, but cannot directly order State agencies to do anything without State authorization (barring a national emergency).
But thanks for trying anyway.....
Yes, who are we to believe? Some guy trolling on the internet, or nearly the entire State political establishment, both Republican and Democrat, and former Federal Prosecutor and Professor of Law John Kroger, our Attorney General?
Apr 4, '09
I'm all for consumer protection, but not all debt-collecting entities are "big bad brother" abusing the system. Most of these comments seem to assume that all debt collection is done on behalf of big corporations, or are trying to collect debts that are non-existent. Wake up!
I work for a sole practitioner doctor. I am the office manager, med assistant, biller and collector. Malpractice is $85 grand before the doors are even open.
Maybe some of you should go out and try to collect a $10 or $15 copay from my patients who seem to think it's okay to stiff the guy who's treating them(they made the appointment to see the doc, not the other way around).
I don't condone abusive debt collection practices, but you all need to remember that there are a lot of folks out there who don't pay their bills! There are people out there trying to collect on legitimately incurred debts. It isn not easy. I give our patients every opportunity to pay their bills, make payment arrangement, you name it. They don't care.
My boss may be a doctor, but he is still a small business man who supports his own family plus three other families with his practice. When people don't pay their bills, everyone is affected. Including you.
AS for the translating mortgage docs into other languages, while it may sound good, the unintended consequence will be that no one will do mortgages for folks who don't speak English well enough to read the paperwork. Problem is, part of the reason we got into this mess is that people don't read and understand what they are signing, whether it's in their native language or not.
I consider myself to be a progressive, but the truth of the matter is that you cannot legislate brains for people. And unfortunately, we seem to think it's okay to make it okay for people to not accept personal responsibility for the decisions they make, the debts they incur and on and on...
Apr 4, '09
So glad to see that the law will cover both internal and external collections. The remaining problem (as far as I can see) is that the laws that this would enforce specifically state third-party collectors. So until those laws get amended, there is still a problem. If that's changed, I'd love to know so that I can make a complaint.
We get ones all the time that call a dozen times a day and never leave a message, call for people who haven't had this number in 9+ years, etc. None of them show caller id information. It's enough to have calls for stuff that I know I owe and am trying to pay off (man do we need a better health care system in this country!), but I definitely don't need ones that aren't mine.
Even if a debt is valid, an entity should not be able to call you dozens of times every day, yell at you, make threats, or harass you at work.
I'm all for businesses collecting debts owned to them. I've had to do it for my own sole proprietorship, so I understand how difficult it can be. But there should still be protections to ensure that debt collectors don't go overboard in trying to collect the debt and cross over into harassment.
Apr 5, '09
Steve, it isn't someone trolling on the internet,I am constantly amazed at your limited power to debate differences. You immediately call those with an opposing view trolls, or worse in your lingo - "republican". Ben, your department already has the power under federal law to attack abusive third party collectors. That the state DOJ shies away from this power is the real problem.
Take the time sheeple and Google FDCPA. Read for yourself. These two acts are more about growing state government than purposeful consumer protection.
Apr 5, '09
Jenni - anyone who collects a debt has to follow the state's Unlawful Debt Collectors Practices Act (the UDCPA). SB 328 gives the AG the power to enforce the UDCPA, so that means we do get to go after the debt collectors that do internal collection. I believe this is good news for you!
You can make a written complaint online, www.doj.state.or.us
Apr 5, '09
Ben, I think that the state DOJ is tieing themselves up attempting to regulate debt collection as potential fraud rather than the current manner allowed under the federal FDCPA. The state suits you mention seem more about collecting huge sums of money for each state, ala the tobacco suits. Remind us please what happened to all those hundreds of million$$ of dollar$$?
Apr 6, '09