By Michael Fuller

Yesterday, a Ninth Circuit Court of Appeals panel opinion ruled that consumers may be able to permanently void mortgage liens in so-called ‘Chapter 20’ bankruptcy cases. Read the full opinion.

The term ‘chapter 20’ means a consumer who files chapter 13 bankruptcy within four years after receiving a discharge of debts in chapter 7 bankruptcy.

The opinion, In re Blendheim, followed similar holdings by the Fourth and Eleventh Circuits. See related post: 9th Cir. BAP Allows Lien Strip in Chapter 20 Bankruptcy

In 2007, the Blendheims filed a straight liquidation Chapter 7 bankruptcy to wipe out their unsecured debts. The day after receiving their Chapter 7 discharge, the Blendheims filed a second bankruptcy case under Chapter 13, in hopes of restructuring mortgages on their condo in West Seattle. The condo was worth about $450,000 and the couple owed $347,900 on their first mortgage and $90,474 on their second mortgage.

The first mortgage holder, HSBC, filed a proof of claim but failed to attach a copy of the promissory note, as required by the bankruptcy rules. The Blendheims objected, and the bankruptcy court, having heard no response from HSBC, disallowed the claim.

The Blendheims later sought an order voiding their first mortgage lien, under the theory that HSBC’s disallowed claim permitted the court to eliminate HSBC’s state-law right of foreclosure. The bankruptcy court agreed with the Blendheims, and HSBC appealed. See related post: 11th Circuit Allows Second Mortgage “Strip Off” in Chapter 20

HSBC argued on appeal that the bankruptcy court could not void its first mortgage lien because the Blendheims were not eligible for discharge under Chapter 13. HSBC also raised due process issues and argued that the Blendheims’ plan was filed in bad faith.

The appellate panel held that the Blendheims could permanently void HSBC’s mortgage lien upon completion of their chapter 13 plan, whether or not they were entitled to a discharge. The court reasoned that the language of § 506 simply did not impose a discharge requirement on a debtor’s ability to void a lien.

The panel also held that the Blendheims’ plan was filed in good faith, based on their valid reorganizational goals and lack of egregious behavior. The panel acknowledged that successive bankruptcy filings did not constitute bad faith per se.

—

Michael Fuller is a partner at Olsen Daines in Portland, Oregon and a consumer law adjunct professor at Lewis & Clark Law School.

By Kelly Harpster and Eva Novick

Several bills passed in the 2015 legislative session that may impact your practice or your consumer clients. Many of these bills will go into effect on January 1, 2016. We summarized the bills and grouped them into three subject matters areas below: Foreclosure/Mortgage, Unlawful Trade Practices Act and Other Consumer Protection-Related Bills. A number of these bills do not have a private right of action; however, you may still want to be aware of these changes when you are giving clients advice or screening potential clients. To view the full text of any bill, go to https://olis.leg.state.or.us/.

Foreclosure/Mortgage

SB 252            : ODVA Exempt From Foreclosure Mediation

SB 252 amends ORS 86.726 to exempt the Oregon Department of Veterans’ Affairs from the requirement to request or participate in a resolution conference with the grantor of a residential trust deed prior to commencing a foreclosure.

The bill takes effect on January 1, 2016.

SB 277            : Expanded Use of NMLS for Financial Businesses

SB 277 amends provisions of ORS 697 and ORS 717 to authorize the Department of Consumer and Business Affairs to issue rules requiring check-cashing businesses, debt management service providers, and money transmission businesses to register and renew Oregon licenses through the Nationwide Multistate Licensing System (NMLS).

Originally authorized by Congress in 2008 to provide a single, nationwide, online licensing system for mortgage loan originators, NMLS has expanded to include licensing of other financial businesses. SB 277 authorizes DCBS to conform existing licensing procedures to NMLS requirements without changing the base statutory requirements.

The bill took effect on May 20, 2015; however, the amendments apply only to registrations and renewals issued on or after the operative date of August 19, 2015.

SB 367            : Liability for Condo and HOA Assessments During the Redemption Period After Foreclosure

After a judicial foreclosure, the purchaser obtains possession of the property immediately but the judgment debtor retains legal title until the six-month redemption period ends. SB 367 amends ORS 94.712 and ORS 100.475 to clarify that the purchaser—more precisely, the certificate holder as defined in ORS 18.960—is solely liable for all homeowner’s association or condominium assessments that come due during the redemption period. If the property is redeemed, SB 367 provides that the assessments paid by the purchaser or claimant are included, with interest, in the redemption amount.

The amendments apply to properties sold at an execution sale conducted on or after the effective date of January 1, 2016.

HB 2532: Required Disclosures for Reverse Mortgages

HB 2532 amends ORS 86A.196 to require that every advertisement, solicitation or communication intended to induce a person to apply for or enter into a reverse mortgage must contain a clear and conspicuous summary of the terms of the mortgage.

Specifically, if included in the mortgage contract, the summary must disclose that: (1) a borrower must repay with interest any amount still owing at the conclusion of the term, (2) certain fees and charges may be added to the loan, (3) the balance may increase with interest over the life of the loan, (4) the borrower is directly responsible for paying taxes, insurance and maintenance costs and that failure to pay these amounts may cause the loan to come due immediately, and (5) interest on the mortgage is not tax deductible until the loan is repaid.

The requirements of HB 2532 apply to lenders and their agents and affiliates but do not apply to financial institutions as defined in ORS 706.008, licensees as defined in ORS 725.010, or mortgage bankers and mortgage brokers licensed under ORS 86A.106.

The bill took effect on May 18, 2015; however, the requirements apply only to reverse mortgage transactions that occur on or after the operative date of January 1, 2016.

Unlawful Trade Practices Act

SB 601            : Expanded Identity Theft Protection

SB 601 amends the Oregon Consumer Identity Theft Protection Act.  It expands the definition of “personal information” to include certain biometric data, health insurance policy numbers and health information.  It also adds that persons who had a breach of security must provide notice to the Attorney General if the breach affects more than 250 Oregonians.  HIPPA covered entities do not need to give notice of data breaches to Oregon consumers as long as they provide a copy of the notice sent under HIPAA to the Attorney General.

Enforcement of the Oregon Consumer Identity Theft Protection Act will also be under the Unlawful Trade Practices Act, ORS 646.607.

The bill takes effect January 1, 2016.

HB 2383: Registration of Telephonic Sellers

HB 2383 amends ORS 646.551, which relates to the registration of telephonic sellers.  The bill adds to the definition of telephone solicitation business opportunities.  Any person who solicits the purchase of a business opportunity by telephone needs to register as a telephonic seller pursuant to ORS 646.553 and provide certain disclosures at the time the solicitation is made pursuant to ORS 646.557.

The bill defines a business opportunity as a commercial arrangement in which three events must occur: (1) the seller solicits a prospective purchaser to enter into a new business or to buy ancillary services within 60 days after entering into a new business, (2) the prospective purchaser makes a payment for the business or services, and (3) the seller claims that it will find customers for the purchaser of the business or buy back goods or services from the purchaser.  Excluded from the definition of a business opportunity are sales of an ongoing business, certain sales of demonstration equipment and franchises.

The bill took effect on September 1, 2015.

HB 2377: Phishing Violates the UTPA

HB 2377 makes phishing a violation of the Unlawful Trade Practices Act, under ORS 646.607.  The bill provides that, unless for a lawful investigation, a person may not use a website, email, text message or other electronic means to induce another person to provide personal information by falsely representing who the person is.

The bill took effect May 21, 2015.

Other Consumer Protection-Related Bills

SB 278            : Unlicensed Consumer Finance Loans Void

Oregon law requires consumer finance, title loan and payday lenders to obtain a license from the Department of Consumer and Business Affairs. Under prior law, loans made without a license were merely voidable. SB 278 renders consumer finance, payday and title loans by an unlicensed lender void and therefore uncollectible.

SB 278 amends ORS 725, which applies to certain consumer finance loans of $50,000 or less, and ORS 725A, which applies to payday and title lenders. If a person makes a covered consumer finance loan, payday loan, or title loan without a license, the loan is void not voidable and the lender may not deposit the borrower’s check or money order, withdraw money from the borrower’s accounts, or otherwise collect principal, interest or fees in connection with the loan.

The bill contains an exception for lenders that held a license that lapsed inadvertently or by mistake. For lapsed title and payday lenders, the Director of DCBS may determine by order whether and how the licensee may collect.

The bill takes effect on June 18, 2015; however, the amendments apply only to loans made on or after the operative date of September 17, 2015.

HB 2282: New Requirements for Vehicle Dealers

In part, HB 2282 amends ORS 822.043.  The bill provides that vehicle dealers may charge a document processing fee for: issuing or transferring a certificate of title; registering a vehicle; issuing a license plate; verifying and clearing a title; perfecting, releasing or satisfying a lien; complying with federal security requirements; and rendering any other services in order to comply with state or federal law.  The dealer may charge $150 if it uses an electronic system and $115 if it processes the paperwork by hand. If a consumer pays a dealer a document processing fee, the dealer must prepare and submit all documents to complete the transaction as permitted by law.

The bill takes effect January 1, 2016.

HB 2832: Limits on Third-Party Financial Aid Contracts

HB 2832 creates new provisions and amends ORS 352.129.  The bill provides that if a public or private post-secondary institution of education has a contract with a third party to disburse and manage state or federal financial aid for students, the contract may not include a revenue sharing provision.  The contract must also prohibit the third party from charging students a fee for the initial disbursement of financial aid funds via paper check or electronic funds transfer, a transaction fee for debits from an account or an inactivity fee.  A college or university that enters into a contract with a third party to disburse and manage financial aid funds must post the contract on its website.

The bill takes effect January 1, 2016.

By Joel Shapiro.
The Consumer Financial Protection Bureau (CFPB) recently issued a comprehensive report to Congress on arbitration clauses.  The study was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  The report covers pre-dispute arbitration clauses in six different consumer financial product markets: credit cards, checking accounts, prepaid cards, private student loans, payday loans, and mobile wireless third-party billing.

The report found that:

• over 50% of credit card loans contain binding arbitration clauses
• 94% of credit card loans would include binding arbitration clauses if not for an antitrust suit against a number of card issuers
• 44% of deposits in checking account  include arbitration clauses in the account contracts
• close to 100% of market share in the six product markets studied prohibit class action suits in their arbitration provisions
• Consumers are generally unaware that their credit card contracts include arbitration clauses
• Consumers don’t understand that they don’t have the right to go to court
• Most consumers whose agreements contain arbitration clauses wrongly believe that they can participate in class action suits

See the report here:  http://www.consumerfinance.gov/reports/arbitration-study-report-to-congress-2015/”

By Michael Fuller, The Underdog Lawyer ®

Last October, an Oregon bankruptcy court became the first in the country to require a senior lien holder to accept title to a home surrendered in chapter 13.

The case, In re Watt, gave hope to families across the country that remained obligated to pay HOA dues, even after moving out of their underwater homes.

See related post: Judge Orders Mortgage Company to Accept Title to Surrendered Home

Last week, Oregon’s chief district court judge reversed the Watt opinion in favor of the lien holder, Bank of New York Mellon.

The bank had appealed the bankruptcy judge’s decision, arguing that the court erred in confirming the Watt family’s chapter 13 plan.

The district court judge agreed, reasoning that the bankruptcy court, “read language into the Bankruptcy Code that does not exist, as well as frustrated the purpose of the statute, which is to provide protection to creditors holding allowed secured claims.”

“With all due respect to the district court opinion, we think the judge got it wrong,” says bankruptcy lawyer Michael D. O’Brien, who represents the Watt family.

The Watt family is considering options to appeal.

About the author: Michael Fuller is a partner at OlsenDaines, P.C. in Portland, Oregon and an adjunct consumer law professor at Lewis & Clark Law School.

National Consumer Protection Week (NCPW) is a coordinated campaign that encourages consumers nationwide to take full advantage of their consumer rights and make better-informed decisions.  Find out more at:

http://www.ncpw.gov/

In recognition of National Consumer Protection Week, the Oregon Department of Justice has released its 2014 list of Top 10 Consumer Complaints

By Brenda Bradley

The Oregon Home Solicitation Sales Act, ORS 83.710-83.750, can provide a powerful tool to help consumers rescind a door-to-door or other sale made at a place other than the seller’s main or permanent place of business.  The Home Solicitation Sales Act generally applies to sales, leases or rentals of goods or services in an amount of at least $25 and purchased primarily for personal, family or household purposes.  ORS 83.710 and ORS 83.010.  It requires that sellers provide buyers with a written agreement – in  the same language that the seller used for the sales presentation – containing specified information, including a notice informing the buyer that he or she has a three-day right to cancel.  See ORS 83.730.  Importantly, if the seller fails to provide a written agreement that complies with ORS 83.730, the buyer’s right to cancel continues until three business days after proper notice is given.  See ORS 83.730(4) and 83.720(1).  There is a similar FTC rule governing “door-to-door sales” – see 16 C.F.R. §429.0, et seq. – although the federal rule may not allow consumers a continuing right to cancel.

Following is a checklist intended to aid practitioners in identifying potential violations which may give consumers rescission rights under the Oregon Home Solicitation Sales Act.  For more information, see ORS 83.710-83.750 and Volume 2, Consumer Law in Oregon (OSB Legal Pubs 2013).

Checklist of Potential Violations – Oregon Home Solicitation Sales Act

General requirements – see ORS 83.730:

         Was there a written agreement, signed by the buyer?

         Copy of the written agreement given to the buyer?

         Buyer’s copy of written agreement has been fully completed?

         Date of transaction matches the date of buyer’s signature?

         Written agreement is in the same language that was principally used in the sales presentation?

         Buyer given two copies of a Notice of Buyer’s Right to Cancel?

         Is the Notice of Buyer’s Right to Cancel printed in conspicuous, 10-point (like this checklist) or larger type?

         Sales rep orally informed the buyer of the right to cancel?

Specific information required in the written agreement – see ORS 83.730(1)(b):

         Date of the transaction:  Must be the date on which the buyer actually signs the written agreement

         Seller’s name and address of seller’s “place of business”

         Statement in 10-point or larger bold type, in immediate proximity to the space for the buyer’s signature:

“You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction.  See the attached notice of buyer’s right to cancel for an explanation of the right to cancel.”

         (If both copies of the notice of Notice of Buyer’s Right to Cancel are not actually attached to the written agreement, the statement next to the buyer’s signature must state the actual location of the Notice of Buyer’s Right to Cancel.)

Specific information required in (both copies of) the Notice of Buyer’s Right to Cancel – see ORS 83.730(1)(c):

         Name of the seller

         Address of seller’s “place of business”1

         Date of the transaction

         Date by which buyer can give (mail) notice of cancellation:  Must be at least three “business days”  after the date of the transaction

         The Notice of Buyer’s Right to Cancel must read as follows, or use the language required by the FTC rule (p. 2);

Language required by ORS 83.730(2):

NOTICE OF BUYER’S RIGHT TO CANCEL

(1) (Date) You, the buyer, may cancel this agreement without any penalty, cancellation fee or other financial obligation by mailing or delivering a notice to the seller within THREE BUSINESS DAYS from the above date.

(2) If you cancel:

(a) Any property you traded in, any payments you made under the sales contract and any checks or notes you signed will be returned within 10 business days following receipt by the seller of your notice of cancellation. Any security interest that arises from the transaction will be canceled.

(b) You may either make available to the seller at your residence, in substantially as good condition as when received, any goods delivered to you under the sales contract or you may comply with the seller’s instructions regarding the return shipment of the goods at the seller’s expense and risk.

(c) If you make the goods available to the seller at your residence and the seller does not pick up the goods within 20 days of the date of your notice of cancellation, you may keep or discard the goods without further obligation.

(d) If you do not make the goods available to the seller, or if you agree to return the goods to the seller and you do not return the goods, you must perform all of your obligations under the sales contract.

(3) To cancel this transaction, mail or deliver a signed and dated copy of this notice or other written expression of your intention to cancel, or send a telegram, to (name of seller) at (address of seller’s place of business) not later than 12 midnight on (date), the third business day after you signed the written agreement or offer to purchase.

I HEREBY CANCEL THIS TRANSACTION. _______________________ (Signature of buyer) (Date)___________________

Language required by the FTC Rule, 16 C.F.R. 429.1(b):

NOTICE OF CANCELLATION [or “NOTICE OF RIGHT TO CANCEL”] [enter date of transaction]

_________________

(Date)

You may CANCEL this transaction, without any Penalty or Obligation, within THREE BUSINESS DAYS from the above date.

If you cancel, any property traded in, any payments made by you under the contract or sale, and any negotiable instrument executed by you will be returned within TEN BUSINESS DAYS following receipt by the seller of your cancellation notice, and any security interest arising out of the transaction will be cancelled.

If you cancel, you must make available to the seller at your residence, in substantially as good condition as when received, any goods delivered to you under this contract or sale, or you may, if you wish, comply with the instructions of the seller regarding the return shipment of the goods at the seller’s expense and risk.

If you do make the goods available to the seller and the seller does not pick them up within 20 days of the date of your Notice of Cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller, or if you agree to return the goods to the seller and fail to do so, then you remain liable for performance of all obligations under the contract.

To cancel this transaction, mail or deliver a signed and dated copy of this Cancellation Notice or any other written notice, or send a telegram, to [Name of seller], at [address of seller’s place of business] NOT LATER THAN MIDNIGHT OF [date].

I HEREBY CANCEL THIS TRANSACTION.

(Date) _______________________

(Buyer’s signature) _______________________

———————————–

On November 4, 2014, the U.S. Supreme Court heard oral arguments in Jesinoski v. Countrywide, Docket No. 13-684, a Truth in Lending Act case arising from the Eighth Circuit.

The Truth in Lending Act (“TILA”) is a comprehensive consumer protection statute that regulates the disclosure and, to a lesser extent, the substance of consumer loans. One of its most powerful provisions creates the right for consumer borrowers to rescind refinanced or second mortgages secured by their primary residence for any reason within three days after closing, or for up to three years post-closing if material disclosures are not given or are inaccurate. At issue in Jesinoski is whether merely mailing a notice of rescission within three years of closing a loan is sufficient to “exercise” the right to rescind under 15 U.S.C. § 1635(a) or, alternatively, whether a borrower who wants to rescind the loan must file a lawsuit within the three-year statutory period.

The case has garnered considerable attention from the banking industry and consumer advocates because it stands to resolve a circuit split. The Third, Fourth and Eleventh Circuits have ruled that mailing a letter notifying the creditor of the borrower’s intent to cancel within the three-year period is enough exercise the right to rescind. Conversely, our Circuit, the Ninth, and the First, Sixth, Eighth, and Tenth Circuits hold that the three-year period set forth in 15 U.S.C. §1635(f) to exercise the “right of rescission” requires a borrower to file a lawsuit within three years of consummation of the loan. Because resolution of this and related TILA rescission issues is so critical to preserving borrowers’ rights, six of amicus briefs have been filed.

Those interested in following the progress of Jesinowski can subscribe to updates on the SCOTUSblog website at http://www.scotusblog.com/case-files/cases/jesinoski-v-countrywide-home-loans-inc/

By: Jeremiah Ross
503.224.1658
http://www.rosslawllc.com/

I often get frantic calls from people who have recently purchased and financed a vehicle.  These people are asking for help because the dealer is claiming the consumer must return to the dealership and sign additional financing documents with terms less favorable to the consumer.   Consumers are confused and angry when they learn the financing fell through and the dealer no longer has their trade-in to return to them.   Most of the time these consumers are victims of a bushing scam.  These bushing scams are also known as “spot delivery” or yo-yo sales.

Here is the way bushing scams typically work.  The dealer will sell a person a car and offer to finance the vehicle.  The consumer signs financing paperwork and takes the vehicle home.  Usually the consumer is under the impression the financing is complete and the vehicle is theirs.   Unbeknownst to the consumer, after the consumer leaves the lot the dealer is still attempting to find a finance company to finance the vehicle.  Consumers may receive credit denial letters in the mail, but think it is in error because the dealer told them the vehicle was financed.  Eventually, the dealer contacts the consumer and informs them financing could not be obtained.  The scam is complete when the dealer has the consumer agree to new less favorable financing terms for the vehicle.  This often results in the consumer paying a higher interest rate and putting an additional down-payment down on the vehicle.

The dealer benefits from this transaction because the consumer is usually under the impression the vehicle was theirs the day they drove it off the lot.  Consumers have often put money into the vehicle to buy things like floor mats, a stereo, or other items.  As a result, they feel trapped and will sign new less favorable financing terms.  Additionally, dealers may inform the consumer that their trade-in has been sold and the dealer does not have “authority” to refund their down-payment.  These are frustrating issues for consumers and practitioners alike.  However, in Oregon there are laws to protect consumers in these situations.

Below is a list of questions and answers to assist practitioners and consumers that are facing a spot delivery issue:

Is Spot Delivery Legal In Oregon? Yes, but dealers must comply with ORS 646A.90 and OAR 137-020-0020 (3).  These requirements allow dealers to make an offer to sell or lease a vehicle to a consumer that is subject to future acceptance by a lender.  ORS 646A.90 (2)

How long does a dealer who spot delivers a vehicle have to obtain financing for the vehicle? A dealer must find financing for the vehicle under the exact terms negotiated between the dealer and consumer within 14 days after the date on which the buyer takes possession of the vehicle. ORS 646A.90 (3) (a)

What happens to a Consumer’s trade-in in a spot delivery deal?  In a spot delivery deal, the dealer cannot sell or lease the consumer’s trade-in before the dealer has received final approval of funding from the lender. ORS 646A.90 (3) (b) 

Can a dealer offer to obtain financing for a vehicle knowing that the financing will not be approved?  No, a dealer cannot spot deliver a vehicle to a consumer unless the dealer has a “reasonable basis to believe the consumer could qualify for the terms of financing quoted at the time of delivery.” 137-020-0020 (3) (x)  This is a powerful rule that consumers with horrible credit can use when the dealer initially has them sign a retail installment contract or lease with a low interest rate and little money down.

Does a dealer that fails to finance a spot delivered vehicle have to tell a person why the financing fell through? Yes, if a dealer spot delivers a vehicle and fails to obtain financing under the original terms, the dealer cannot make a misrepresentation regarding why the consumer does not qualify for the original financing terms or misrepresent why the transaction cannot be completed under the original terms. 137-020-0020 (3) (y)  This rule prohibits dealers from calling the consumer back to the lot to sign new less favorable financing terms, even after the consumers original terms were approved by the lender.

What does the dealer have to do if they cannot obtain financing for the vehicle under the original terms?

A dealer that spot delivered a vehicle to a consumer and later learns the consumer does not qualify for the original terms must do the following prior to offering, negotiating, or entering into new terms for the purchase or lease of the vehicle:

1. Inform the consumer that the consumer is entitled to have all items of value received from the consumer as part of the transaction, including any trade-in and down payment, returned to the consumer.

2. If the consumer is physically present when the dealer informs the consumer that the consumer does not qualify for the terms offered, the dealer must return all items received from the consumer as part of the transaction. The dealer must have a refund check and the Trade-In keys immediately available.

3. If the dealer informs the consumer by telephone, text, e-mail, letter, or other means without the consumer present, that the consumer did not qualify for the terms offered. The dealer must clearly disclose the consumer’s right to receive the immediate return of all items of value, i.e. trade in and down payment, when the consumer returns the vehicle.  The consumer must have the actual ability to obtain these items of value and the dealer cannot simply inform them of their right to receive these items back. The dealer must have a refund check and the Trade-In keys immediately available.  Dealers usually have a difficult time complying with this law as they usually sell the consumers trade-in prior to obtaining the financing.

Dealers shall inform consumers of these options and cannot hold the trade-in and down payment for ransom to have the consumer enter into a less favorable financing agreement.  The Commentary 137-020-0020 (3) (z)  makes it clear; “The consumer has an absolute right to walk away from the deal if the original offer is not going to be honored.”  137-020-0020 (3) (x); See Also, ORS 646A.90 (4)

In a failed Spot Delivery, can the dealer charge the consumer for vehicle damage and the mileage the consumer put on the vehicle? Yes, but only if the offer or contract to sell the vehicle provided in writing that the buyer is liable for: the fair market value of damage, excessive wear and tear, or loss of the motor vehicle while the vehicle is in the consumer’s possession.  Additionally, if within 14 days of that date the buyer takes possession of the vehicle the seller sends notice to the buyer by first class mail that financing is unavailable, the dealer may charge for mileage the buyer put on the vehicle.  ORS 646A.90 (4) (b) explains how the mileage is computed and notes, “The [mileage] charge may not exceed the rate per mile allowed under federal law as a deduction for federal income tax purposes for an ordinary and necessary business expense.” ORS 646A.90 (4) (b).

The above list is not exhaustive as many other statutory violations often occur during bushing scams.  However, each situation is unique and these statues and rules are helpful in guiding the practitioner and consumer who is facing a spot delivery issue.  ORS 646A.90  and 137-020-0020 (3) do not explicitly state a consumer has a right of action to sue under these statutes and rules.  However, a creative practitioner can use these laws as a basis for a claim for relief.

Please remember the law is constantly changing and you should refer to the statute and applicable case law before relying on any of the information in this post.

Agencies seek to maintain Congress’s vision of applying the validation process to each subsequent collector of a consumer debt

By John Adams

On August 20, 2014, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) filed a joint amicus brief in an appeal of a Fair Debt Collection Practices Act (FDCPA) case in the United State Court of Appeals for the Ninth Circuit. The case, Maria Hernandez v. William, Zinman & Parham, P.C., focuses on the FDCPA’s debt validation notice process well known to the consumer law bar and concerns the interpretation of which communication qualifies as a debt collector’s “initial communication” under 15 U.S.C. § 1692g(a). According to the agencies, the Ninth Circuit has not previously defined the phrase.

Background

In cross motions for summary judgment filed in the U.S. District Court for the District of Arizona, the issue became whether the statutory language of § 1692g(a) obligated the defendant (debt collector) to comply with the requirements of the validation notice process[1] if the defendant’s communication to the plaintiff was not the initial communication that the plaintiff received about the alleged debt. The defendant’s argument, which the district court adopted, reasoned that since an earlier, initial debt collector’s communication to plaintiff activated the §1692g requirements, defendant’s communication—sent as a subsequent debt collector—was not subject to the validation notice requirements. The district court reached this conclusion by determining that the statutory language suggested that there would be only a single initial communication, and that subsequent debt collectors—by their later-in-time status unable to be considered the sender of the initial communication to the consumer about the debt—were not responsible for sending the statutory validation notice.

In granting summary judgment for defendant, the district court’s plain text interpretation of the section anticipates only one initial communication, thereby releasing subsequent debt collectors from the requirements of the debt validation process. This has obvious adverse implications for consumers attempting to challenge the validity of debts which may have been sold multiple times before collection begins in earnest.

The Bureau and Commission’s argument for the reversal of the district court takes a two-prong approach, beginning with a textual analysis that emphasizes the consistently broad meaning given to “a debt collector” and the absence of an “initial” limitation that the district court mistaken inserted into the broader phrase that Congress actually used in the statute. The agencies seek to clarify that statute’s use of the phrase “the initial communication” has been read to mean each debt collector’s intial communicaiton with a consumer, and that interpretation is the most likely one in light of the legislative history that demonstrates that Congress’s purpose for enacting §1692g was to end the frustrating issue of debt collectors collecting the wrong payments from incorrect individuals.

Lastly, the agencies’ brief reminds the Court that as the federal agencies responsible for enforcing the FDCPA, their reasonable construction of the statute deserves great weight in the Court’s ultimate interpretation of the statutory language.

The Bureau and Commission’s Joint Amicus Brief

The District Court’s Memorandum of Decision and Order

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing—(1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; (4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of the judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and (5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.