A new report from the Center for Responsible Lending (CRL) documents how sketchy debt buyers – companies that purchase debt from lenders for “pennies on the dollar” and then try to collect from consumers – can win lawsuits against people without adequately proving that the debt is really owed.
The report, “Undue Burden: The Impact of Abusive Debt Collection Practices in Oregon,” argues that the system is rigged in favor of debt buyers, to the detriment of consumers. It estimates that Oregonians were held responsible for $54 million over a three-year period – much of which was never proven to be owed.
“People should understand that since there are so many debt claims that have incorrect information, being wrongly pursued in court can happen to anyone,” says CRL’s Lisa Stifler, Deputy Director of State Policy.
Oregon’s Department of Justice(DOJ) considers improper lawsuits filed by debt buyers a problem, says Kristina Edmunson of the agency. “DOJ is concerned about practices in the debt buyer industry that are unlawful or unfair to debtors.”
Oregon passed legislation in 2017 intended to tighten debt collection practices, but CRL believes the bill was not enough, that its reform does not address a “fundamental problem,” that “debt buyers do not have to produce records of a debt to the court in order to win a judgment.”
The CRL report found that just six large debt buyers operating in Oregon filed almost 25% of the civil lawsuits against consumer in the last five years, about 75,000 cases, “indicating,” it says, “that these firms have made a business out of suing people with very little burden of proving their cases.”
Oregonians file more complaints about debt collection practices to the federal Consumer Financial Protection Bureau (CFPB) than any other category but mortgages. The most common complaint was “debt was not mine.” Complaints that the amount was wrong or the debt was already paid were also common. Debt collection was the most frequent complaint category among military service members.
Oregon law makes it possible for debt buyers to obtain property liens and garnish wages by up to 25% of a person’s paycheck. “Imagine being sued for a debt you don’t owe, having no money for an attorney or court fees, having no time off work to fight it, and having your wages garnished by 25%,” says Carlos Garcia, Director of Economic Opportunity at Hacienda CDC. “How is that fair?”
Edmunson says the DOJ does not give legal advice to Oregonians but that it “recommends that individuals who are served with a summons or threatened with a lawsuit immediately consult a lawyer.”
One such attorney is Michael Fuller, Chair of the consumer protection group at Olsen Daines, a Portland legal firm that, among other services, represents consumers against debt collectors. Fuller and the firm have sued more than twenty debt agencies in recent years for using wrongful practices. He is currently pursuing a class action complaint against Oregon’s largest debt collection firm, Gordon, Aylworth & Tami, which, he argues, operated a dummy service corporation to collect excessive fees.
“Our class action,” Fuller says, “seeks $200 for every person charged an excessive fee in the past year. We expect that thousands of Oregon consumers are affected.”
In addition to finding an attorney, Edmunson advises that consumers file a complaint with a variety of governmental agencies, including the DOJ or the CFPB. But she cautions that filing complaints “do not stop the lawsuit and a debtor may lose the ability to contest the lawsuit if he does not timely file a response.”
Consumers can also complain to the State’s Department of Consumer and Business Services, the agency that licenses debt
buyers and debt collectors.
“Oregonians have a few options within the state,” Stifler says. In addition to the agencies above, she suggests consumers request help from Legal Aid Services of Oregon and the Oregon Law Center.
More information about the rights of debtors in Oregon is available on the DOJ website, doj.state.or.us/consumer-protection/credit-loans-debt/debt-collection/.