Category Archives: Uncategorized

An Explanation of Overbiffing

By: Joel Shapiro
Consumer lawyers should be aware of an emerging unfair debt collection practice known as “overbiffing.”  The term derives from the acronym BIF, which stands for “balance in full.”  Overbiffing occurs when a debt collector inflates the balance actually owed by a consumer and instructs the consumer to pay the excessive amount.  Debt collectors often combine overbiffing with abusive, fraudulent tactics by threatening consumers with false legal consequences if they fail to pay the inflated balance.  In all inquiries from consumers involving debt collection, attorneys should investigate to determine whether the amount being collected is inaccurate.
NOV 7, 2018 
Overstating a debtor’s balance — also called “overbiffing” — is the latest outrage in unfair debt collection.
In a recent case, regulators allege a New York debt collector may have tricked thousands of consumers into paying far more than they actually owed by fraudulently inflating consumer balances and using profane, abusive and illegal tactics to collect the fabricated bills. The term is called “overbiffing” because the scammers overstate a person’s “balance in full,” which is sometimes shortened to BIF.
Slapping a temporary restraining order on a half-dozen companies affiliated with a Buffalo debt collector named Robert Heidenreich, also known as “Bobby Rich,” regulators maintain that Heindenreich’s bill collectors chronicled just how much they “overbiffed” by using forms showing the actual balance due as well as the inflated amount that they told consumers was owed.
In many cases, this false “balance given” was hundreds, even thousands, of dollars more than the consumer actually owed. “This is really egregious,” says John Heath, directing attorney at Lexington Law, a credit repair firm. “Unfortunately this is something that happened enough that the FTC had to involve itself in filing an action.”
In addition to artificially inflating debt balances, Heidenreich directed his employees to mislead debtors about who was calling — encouraging his debt collectors to pose as lawyers or members of law enforcement, according to complaints filed by the Federal Trade Commission and the New York Attorney General’s office.
The debt collectors would warn the consumer had committed a crime and was about to be arrested, sued or served with legal papers because of a failure to pay an alleged debt.  When the frantic consumer would ask how to stop the legal proceedings, the debt collectors would direct them to “attorneys” — actually just additional debt collectors — who would allow them to pay over the phone with a debit card.
When consumers balked at paying the bill, the debt collectors turned abusive, according to the complaint, engaging in threatening expletive-filled rants, sometimes threatening to call the debtor’s employer or relatives. Heidenreich’s attorney failed to return calls for comment.
Illegal behavior
The Fair Debt Collection Practices Act prohibits all of these actions. Debt collectors are not allowed to use abusive language, or contact anyone other than the debtor in their attempt to collect. Misrepresenting who collectors are, lying about the consequences of not repaying a debt and fabricating debt amounts are also prohibited under FDCPA, as well as other fraud statutes.
Anyone who is contacted by a debt collector has the right to demand that the collector “validate” the debt in writing, showing how much is owed and to whom. Consumers should be able to verify these numbers against the numbers on their own credit reports, which they can get for free at
If a debt collector is abusive or is harassing you with multiple phone calls, you also have the right to bar them from further telephone communication, says Heath. The collector would then be forced to only contact you in writing. If a collector violates these rules, you can report the abuse to your state attorney general’s consumer affairs division or to the FTC.
A federal judge issued a temporary restraining order on Heidenreich and his companies and employees on Thursday, barring them from further violations of the law, as well as from destroying documents or moving company assets.
© 2018 CBS Interactive Inc.. All Rights Reserved

2018 Annual Meeting Notice

 The annual meeting of the Consumer Law Section will be held on Wednesday, November 28, 2018 at noon at the Oregon Department of Justice, 100 Market Street, Hawthorne conference room, 1st floor, Portland, OR 97201.

 During the annual meeting the following nominations will be made for 2019 Executive Committee positions.  Additional nominations will be accepted from the floor.


Terms ending December 31, 2019

Chair:                    Matthew S. Kirkpatrick

Chair-Elect:         Christopher J. Mertens

Past-Chair:          Jeremiah Vail Ross

Secretary:           Colin D. A. MacDonald

Treasurer:           Young Walgenkim


Terms ending December 31, 2020

 Bret A. Knewtson

April Kusters

Eva H. Novick

Jordan M. Roberts

 Members previously elected to the executive committee and continuing through December 31, 2019, include Michael Fuller, Kelly Donovan Jones, Kevin A. Mehrens and Joel D. Shapiro.

 The Section’s fund balance as of December 31, 2017 was $18,096. All Section financial statements can be found at

Ascertainable Loss Under the Unlawful Trade Practice

By: Jordan Roberts

Earlier this year the Oregon Court of Appeals decided Simonsen v. Sandy River Auto, LLC 290 Or App 80 (2018), making it the most recent appellate case to discuss the meaning of “ascertainable loss” under Oregon’s Unlawful Trade Practices Act (the “UTPA”).

Under the UTPA: “a person that suffers an ascertainable loss of money or property, real or personal, as a result of another person’s willful use or employment of a method, act or practice declared unlawful under ORS 646.608, may bring an individual action in an appropriate court to recover actual damages or statutory damages of $200, whichever is greater.  The court or the jury may award punitive damages and the court may provide any equitable relief the court considers necessary or proper.”  ORS 646.638(1).

In Simonsen, the plaintiff purchased a used car from a dealership.  Among other things, the dealer represented that various repairs had been made, that the car was “in good running order,” that it would “not need any major fixes soon” and that plaintiff was getting a “really good deal” and “a great price.”

Two days after purchase a third-party mechanic notified plaintiff that the timing belt on the vehicle needed to be replaced, that the valve cover gaskets leaked, that the exhaust system and undercarriage were severely rusted and that the muffler was beginning to “flake apart.”  In addition, plaintiff learned that the car had been in a previous, undisclosed, accident.

Plaintiff brought a single UTPA action and sought rescission of the purchase pursuant to the UTPA or, in the alternative, actual or statutory damages.  The rescission case was tried to the judge and the damage case to a jury.

The jury returned a verdict finding that the vehicle had one or more material defects, that the dealer knew or should have known of those defects and that defendant willfully failed to disclose those defects to the plaintiff.  The jury also found that plaintiff’s economic damages, measured by the “reduction in the fair market value of the vehicle; and the out of pocket expenses incurred by plaintiff” were $0.

Defendant claimed that the $0 damage verdict meant it had prevailed and that the court was bound by the jury’s $0 damage verdict when deciding rescission.  Plaintiff argued that he was still entitled to rescind the transaction because he suffered an “ascertainable loss” when he received a vehicle that was materially different than what had been represented and, in the alternative, was entitled to statutory damages.  The trial court ruled for Plaintiff on his rescission claim and awarded plaintiff his attorney’s fees.  Defendant appealed and the Court of Appeals affirmed the judgment.

After reviewing the history of the phrase “ascertainable loss” in Oregon case law, the Court of Appeals reaffirmed the principle that “ascertainable loss can be more than a quantified measurement of diminished market value.”  In other words, “ascertainable loss” under the UTPA is not synonymous with “damages.”  Any time that a consumer receives something that is different than that which they were promised or bargained for, that consumer may have a viable UTPA claim to recover the purchase price of the goods or services even if they have suffered no diminished value.

Wells Fargo Bank, N.A., provokes fresh outrage

By David Koen

In the past decade, Wells Fargo Bank, N.A., has repeatedly shocked and awed consumers and regulators with a variety of unlawful practices. Revelations of the bank’s misdeeds – admitted and alleged – continue.

In a regulatory filing on August 3, 2018, Wells Fargo disclosed that a software mistake miscalculated eligibility for home loan modifications, causing about 625 homeowners to be denied relief. Approximately 400 of such customers then lost their homes to foreclosure. The errors occurred between April 2010 and October 2015.

Wells Fargo has created an $8 million compensation fund for affected homeowners. That’s an average of $12,800 for each such homeowner.

The bank also allowed that “[t]his effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.”

Wells Fargo’s announcement that more of its customers may been harmed follows a similar statement the bank made after a previous scandal in which it was embroiled. In 2016, the bank’s own analysis initially revealed that it had created more than 2 million accounts that may not have been authorized by consumers. A year later, Wells Fargo revealed that it had created up to 1.4 million more potentially fake accounts.

Responding to the mortgage modification mishap, U.S. Senator Elizabeth Warren of Massachusetts tweeted, “Because of an error @WellsFargo made, 400 of its customers lost their homes. What’s the bank doing to make it right? Setting aside a few thousand dollars for each of the people affected. Pathetic. The execs who oversaw this – including CEO Tim Sloan – should be fired.”

Wells Fargo spokesman Tom Goyda said that “customers are receiving what Wells believes is appropriate given the circumstances.

Banking while Black

Two black Florida residents have sued Wells Fargo for racial discrimination in recent months following incidents in which the bank allegedly either threatened to or did call the police on its customers.

In one incident, 78-year-old Barbara Carroll alleged she tried to cash a check for $140 at a Wells Fargo branch. Bank employees then refused to cash her check or return her driver’s license, asked what she did for the money and told her they had called police. Carroll said the employees suspected that Carroll was guilty of forgery, even after the man who wrote the check confirmed its legitimacy. On July 18, Carroll sued Wells Fargo in the U.S. District Court for the Southern District of Florida, Case No. 0:18-cv-61646.

The other suit was brought by Jean Romane Elie. Elie has alleged that after trying to withdraw money for rent, a teller called the Palm Beach County Sheriff’s Office. According to Elie, he was handcuffed, detained, and accused of committing a felony. The case is pending in Palm Beach County, Florida, Circuit Court.

A Wells Fargo spokeswoman told The Washington Post that the bank “opposes discrimination of any kind.”

The cities of Sacramento, Philadelphia, Baltimore, Miami and Memphis have also sued Wells Fargo for racial discrimination. In 2012, Wells Fargo entered into a $175 million settlement with the U.S. Department of Justice after Baltimore alleged the bank had steered minorities into subprime loans and gave them less favorable rates than white borrowers. The bank has also settled Memphis’ suit against it.

Residential Rental Markets and Portland’s Relocation Assistance Program

By Kevin Mehrens

The field of consumer law encompasses many different statutes protecting consumers. From the Fair Debt Collection Practices Act to the Unlawful Trade Practices Act, these laws are designed to protect consumers (particularly low-income ones) from abuses of creditors and debt collectors as well as from unscrupulous businesses who would prey upon the financially vulnerable. The portion of the community protected by consumer protection laws is very much the same section of the population that is served by the protections of state and municipal landlord-tenant statutes.

Over the last five years Oregon, and Portland in particular, has seen a rapid increase in residential housing prices. The average cost of a two-bedroom unit in Portland as of August, 2018 was over $1,500.00 per month.[i] This rapid increase in housing prices has had the effect of forcing many low-income families out of their residences in Portland. The response from renters has been a backlash against landlords who have chosen to increase rents with little to no increase in services and conditions of the rental units – everything from renters strikes[ii], massive litigation over the conditions of rental units,[iii] to large- and small-scale protests over rental increases and housing condition as well as the perceived failure of the State legislature to address the problems.[iv]

In response to the dramatic increase in rental prices, state and local governments have passed, or attempted to pass, a series of acts designed to lessen the impact on affected residents. Notable among these is the Portland City Code § 30.01.085, also known as the Portland Mandatory Renter Relocation Assistance Ordinance. Initially passed as a temporary, emergency measure by the Portland City Council in November 2015, the Ordinance has gone through a number of revisions. It was adopted in its current form as a permanent measure in March 2018. This article will describe the goals and terms of the Ordinance as well as discuss the procedures through which tenants can protect themselves in order to ensure that their landlord abides by the terms of the Ordinance.

The Portland City Council enacted the Ordinance in order to “protect the availability of publicly assisted affordable housing for low and moderate income households . . . .”[v] The stated policy for the Ordinance is “that all Portlanders, regardless of income level, family composition, race, ethnicity or physical ability, have reasonable certainty in their housing, whether publicly assisted or on the private market. . . .[vi] In order the effectuate these goals, the Ordinance requires a landlord to compensate a tenant in an amount up to $4,500.00 depending on the size of the dwelling unit when the landlord either (1) terminates the tenancy without cause or (2) raises the rent by 10 percent or more during any rolling 12-month period.

No Cause Termination of Tenancies. Oregon state law only requires 30 or 60 days’ notice before a landlord can terminate a residential tenancy.[vii]  Portland now requires 90 days’ notice (with certain, narrow exceptions) for all no-cause terminations. These notices must now include a description of a tenant’s rights under the Ordinance—including the eligible amount of the relocation assistance. Landlords can still terminate a tenancy with no cause but should they choose to do so they must pay the tenants the relocation assistance. The payment of the relocation assistance must be made no later than 45 days prior to the termination date specified in the termination notice. So, for example, if a landlord issues a termination of tenancy to a tenant on December 15 with an end date of April 30, the landlord must pay the tenant the relocation assistance by March 16 at the latest.

In addition to being triggered upon the delivery of a no-cause termination notice, should a landlord fail to renew or replace an expiring lease, it is obligated to pay the tenant the relocation assistance.

Rent Increase of Ten Percent. The Ordinance first requires at least 90 days’ notice of any rent increase. Should the increase be ten percent or more (in a rolling 12-month period, two five-percent increases in a calendar year would trigger the requirements under the Code) the tenant is confronted with a series of choices:

  • The tenant can accept the increased rent and remain in the unit and pay the increased rent;
  • Within 45 days after receiving the notice of the rent increase, the tenant can send a written request to the landlord for their relocation assistance;
  • Within 31 days of the landlord receiving the request for relocation assistance, the landlord must pay the tenant the eligible assistance amount;
  • Next, the tenant, after receiving the relocation assistance, has six (6) months to do one of the following:
    • Pay back the relocation assistance and pay the increased rent, or;
    • Provide the landlord with a termination notice and move out of the unit.

So the provisions of the Ordinance dealing with situations in which a landlord dramatically increases the rent place an affirmative obligation on the tenant to request the money or else they will presumably be deemed to have accepted the rent increase. And while the landlord is required to provide a notice of the tenant’s rights with any rent increase, there is no specified form that such a disclosure needs to be in. The Ordinance simply states, “A Landlord shall include a description of a Tenant’s rights and obligations and the eligible amount of Relocation Assistance under this Section 30.10.085 with each and any . . . Increase Notice . . . .[viii]  Such a description could be in the form of a copy of the Ordinance, which is not so easy to understand, particularly for tenants for whom English is not their primary language.

The legal and political challenges to the tenant protection measures are far from over. These tenant protections have seen a concerted response from landlord groups seeking the repeal or rollback these protections as being too onerous for the landlords.[ix] In July 2017, a landlord challenged the Ordinance in Multnomah County Circuit Court as, among other things, violative of an Oregon statute prohibiting rent control.[x] While Judge Henry Breithaupt found that the Ordinance was valid, the case is currently on appeal with the Oregon Court of Appeals. The next few years will certainly see many more, new clashes between landlords and tenant advocacy groups and attorneys as the regulations and laws are fleshed out.





[v] Portland City Code § 30.01.020

[vi] Portland City Code § 30.01.010

[vii] Oregon Revised Statutes § 90.427

[viii] Portland City Code § 30.01.085 D


[x] Owen, et al. v. City of Portland, No. 17CV05043

Protecting Tenants at Foreclosure Act Permanently Extended

By David Venables

Shortly before the end of the Great Recession, Congress passed the Protecting Tenants at Foreclosure Act (PTFA) of 2009 to protect tenants from post-foreclosure eviction.  Although the PTFA’s tenant protections expired on December 31, 2014, they were recently revived when President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act (Senate Bill 2155) into law.  Taking effect on June 23, 2018, the Act repealed the “sunset provision of the Protecting Tenants at Foreclosure Act” and restored “notification requirements and other protections related to the eviction of renters in foreclosed properties.”


The fundamental purpose of the PTFA is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing.1 To that end, the law establishes a minimum time period that a tenant can remain in a foreclosed property before eviction can be commenced and does not affect any state or local law that provides longer time periods or other additional tenant protections.

Under the law, the immediate successor in interest following any non-judicial or judicial foreclosure of a “federally-related mortgage loan,” dwelling, or residential real property must (a) provide bona fide tenants with 90 days’ notice prior to eviction and (b) allow bona fide tenants with leases to occupy property until the end of the lease term, except the lease can be terminated on 90 days’ notice if the unit is sold to a purchaser who will occupy the property.  The PTFA does not require tenants to pay rent to the successor in interest however, any successor in interest may accept rent and, in doing so, assume the rights and obligations of a landlord under Oregon’s Residential Landlord and Tenant Act.

A lease or tenancy is bona fide only if:

(1)       The mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant;

(2)       The lease or tenancy was the product of an arm’s-length transaction; and

(3)       The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent or the rent is reduced or subsidized due to a federal, state, or local subsidy.

Now that the PTFA has been restored, bona fide tenants at the time of a foreclosure of residential property will once again be able to take advantage of these protections to help ease the transition to new housing.


President Nominates Kathy Kraninger to Lead Consumer Financial Protection Bureau

By Colin D. A. MacDonald

On June 18, President Trump nominated Kathleen “Kathy” Kraninger to be the new Director of the Consumer Financial Protection Bureau (CFPB), to succeed Acting Director Mick Mulvaney.  Kraninger currently serves as Associate Director of the Office of Management and Budget (OMB) for General Government. She is an attorney with a long government resume but has not previously worked in consumer protection or financial regulation. Kraninger will require confirmation by the Senate to take office. The Senate Banking Committee held a hearing on Kraninger’s nomination July 19. Mulvaney is expected to continue acting as director in the interim.

Kraninger’s appointment sparked mixed reaction. The White House says that Kraninger “will bring a fresh perspective and much-needed management experience to the [CFPB], which has been plagued by excessive spending, dysfunctional operations, and politicized agendas.” Ohio Sen. Sherrod Brown, the ranking Democrat on the Senate Banking Committee, said that “The White House should pick an experienced, serious, independent leader.” Sen. Elizabeth Warren (D-MA) said that she would place a hold on Kraninger’s nomination, essentially preventing the Senate from voting on the nomination without extraordinary action by the Republican majority, until more information was provided about Kraninger’s role in current Trump Administration policies involving separation of immigrant families at the border.

Kraninger has served in a variety of legislative and executive roles for Republicans, but none of them involved the type of laws the CFPB enforces. At OMB, Kraninger’s role focuses on policy at the Department of Homeland Security (DHS) and the Department of Justice.  In addition to her work at OMB, she previously held political appointments at both DHS and the Department of Transportation under President George W. Bush. She was also a professional staff member for the Senate’s Homeland Security and Governmental Affairs Committee. Kraninger holds a J.D. from Georgetown University and a B.S. from Marquette University.

The CFPB Director has full authority over the agency’s enforcement, regulatory, and education activities. The Bureau regulates a broad range of consumer financial services providers, and its jurisdiction overlaps with the Federal Trade Commission as well as federal bank regulators. In addition to judicial and administrative enforcement authority, it has supervisory powers that allow it to compel large consumer financial services providers to submit to inspections of their practices. The director serves for a five-year term and may only be removed by the President for cause.

By nominating Kraninger – or anyone –  before June 22, the President cleared the way for Mulvaney to continue serving as Acting Director. Under the Federal Vacancies Reform Act, the President may designate a Senate-confirmed officeholder to act as the head of a federal agency during a vacancy, but that appointment is limited to 210 days unless a permanent replacement is nominated. June 22 would have marked 210 days for Mulvaney.

The nomination came after months of speculation about the Trump Administration’s intentions for the agency, which has been a target of Republican ire since it was created. Trump allies had criticized the leadership of Richard Cordray, the Obama appointee who led the agency from 2011 to 2017, for being too aggressive and hurting small businesses. Under the Congressional Review Act, Congress and Trump reversed two regulations promulgated by Cordray’s CFPB – one prohibiting financial service providers from using arbitration agreements that bar consumers from filing or joining class actions and one regulating indirect auto lenders.

The controversy over the directorship has long been fraught. Critics decry the single director structure as placing too much power in the hands of a single official whose actions are not subject to presidential review. Prior to taking his post at OMB, then-Congressman Mulvaney was particularly critical of the agency and called for its restructuring or abolition. Proponents of the agency argue that insulation from political control is necessary to ensure that the agency acts for consumers instead of industry. Opponents of the agency have challenged the leadership structure, as well as the very existence of the agency, as unconstitutional. Lower courts have issued differing opinions, but in January, the full U.S. Court of Appeals for the D.C. Circuit upheld the agency and its structure as constitutional by a margin of 7-3.

Shortly after the agency launched, President Obama was expected to appoint Warren as Director, but opted to appoint Richard Cordray instead when it appeared she could not secure Senate confirmation. Republican Senate leaders filibustered Cordray’s appointment as well, ultimately leading to the political showdown that ended the application of the filibuster to most presidential nominations.

The dispute took on a new dimension when the President appointed Mulvaney to lead the agency in an acting capacity on November 25, the day Cordray resigned. On his last day in office, Cordray named his chief of staff, Leandra English, to the long-vacant position of Deputy Director so that she could assume leadership until a permanent replacement was confirmed. Trump then promptly named Mulvaney, already serving as the Director of OMB, to simultaneously serve as Acting Director at the CFPB. English sued Mulvaney, unsuccessfully seeking an injunction blocking Mulvaney from taking office, but announced she would drop her suit and resign from the agency after Trump nominated Kraninger. For now, the status quo remains with Mulvaney as Acting Director at CFPB and Director of OMB and Kraninger as Associate Director at OMB.

Oregon Court of Appeals upholds $409 million UTPA class statutory damages award

By Kelly D. Jones

On May 31, 2018, in Scharfstein v. BP West Coast Products, LLC, the Oregon Court of Appeals upheld a 2014 Multnomah County jury verdict (as amended by the trial court judgment) awarding $409 million dollars in statutory damages to a previously certified class of millions of Oregon consumers that were the victims of BP’s unlawful trade practices at its affiliated gas stations in Oregon.  292 Or. App. 69 (2018).

More specifically, the class claims against BP stemmed from BP’s violations of Oregon’s Unlawful Trade Practices Act (UTPA) for overcharging consumers for gas at its affiliated stations in Oregon. BP’s signage advertised the cost of its gas per gallon as a certain amount, but when consumers filled their tanks at BP’s ARCO and ampm stations, and then paid with their debit cards, they were charged an additional unlawful and undisclosed $.35 fee on top of each transaction. The false representations about the true cost of BP’s gas violated ORS 646.608(1)(u) of the UTPA, which provides that a “person engages in an unlawful practice if in the course of the person’s business, vocation or occupation the person * *  * [e]ngages in any other unfair or deceptive conduct in trade or commerce.”

Pursuant to ORS 646.608(4), a private cause of action for violating the “catch all” provision of ORS 646.608(1)(u) must incorporate an associated violation of an administrative rule adopted by the Oregon Attorney General. Relevant to BP’s unlawful conduct in this case, the Attorney General had adopted numerous rules, set forth in OAR chapter 137, division 20, regulating the advertising, and mandating specific notification and display, of gas prices (Gasoline Price Advertising). At the trial stage, pursuant to ORS 646.638(1), the class plaintiff opted for statutory damages of $200 for each class member, rather than the $.35 illegal fees per transaction as actual damages. As required under ORS 646.638(8) to award statutory damages in a class case, the jury found that the class members’ ascertainable loss ($.35 card transaction fee) resulted from BP’s reckless UTPA violation.

Previously, in BP W. Coast Prods., LLP v. Ore. DOJ, 284 Or. App. 723, 725, 396 P.3d 244, 246 (2017), the Oregon Court of Appeals rejected BP’s challenge to the validity of Oregon’s Gasoline Price Advertising Rule (“Rule”).

Broadly stated, BP’s chief assignments of error were that (1) the $.35 card transaction fee did not violate the Rule because the Rule does not prohibit a flat fee that is not part of the price per gallon of gas, (2) in accordance with the Oregon Supreme Court’s holding in Pearson v. Philip Morris, Inc., 358 Or. 88, 90, 361 P.3d 3 (2015) the class should not have been certified (or should have been decertified) because ascertainable loss would have to be proven on an individualized basis through each class member proving that they acted in reliance upon BP’s gas price advertising, and (3) the award based upon $200 statutory damages per class member violated the federal Due Process Clause as it was unconstitutionally excessive.

Essentially, the Court rejected the first grouping of BP’s assignments of error because the Rule was validly enacted as previously decided by the Court in its 2017 decision regarding the Rule, and because the trial court correctly interpreted the Rule and its application to BP’s unlawful fee. The Court rejected BP’s second grouping of assignments of error because the class members’ ascertainable loss of the payment of the unlawful fees does not require that the class members prove reliance on any representation made by BP. The Court dismissed BP’s Due Process Clause challenge to the award of statutory damages as “excessive” because BP did not object to the claim for statutory damages until after the verdict had been rendered and the jury had been discharged.

In a press release after the Court of Appeals ruling was released, BP vowed to appeal the ruling in the Oregon Supreme Court:

The over $409 million award is thought to be the second-largest jury verdict in Oregon history:

Consumer Financial Protection Bureau Issues Amended Rules Regarding Residential Mortgage Loan Statements And Borrowers In Bankruptcy

By Chris Mertens, Mertens Law, LLC

April 19, 2018, was the effective date of significant amendments to the regulations promulgated by the Consumer Financial Protection Bureau under the Truth In Lending Act related to mortgage servicing rules. The rules as amended provide a right to receive periodic billing statements on mortgage loans for homeowners who are in or have completed bankruptcy. This long-awaited final rule will give mortgage borrowers greater clarity over what is happening with their mortgage loans and the opportunity to review the loans to ensure proper application of payments and loan servicing by mortgage servicers.

The previous versions of the rule contained an exception to providing periodic billing statements during bankruptcy or after bankruptcy where the personal liability for the mortgage debt was discharged. This often left homeowners in the dark about their mortgage balance, payments, and fees and frustrated with attempts to get information from mortgage servicers.

TILA, Regulation Z, and the Bankruptcy Exception for Mortgage Periodic Billing Statements

The Truth In Lending Act (TILA) is codified at 15 U.S.C. § 1601, et seq. TILA was enacted on May 29, 1968, as Title I of the Consumer Credit Protection Act. Pub.L. 90–321, 82 Stat. 146. Some of the expressed purposes of the Truth In Lending Act are to assure meaningful disclosure of credit terms and to protect consumers from inaccurate and unfair billing practices. 15 U.S.C. § 1601(a).

The Regulations implementing TILA were originally published at 12 C.F.R. 226 as “Regulation Z” (Reg Z). References to the requirements imposed under TILA also include reference to the applicable regulation in Reg Z. 15 U.S.C. § 1602(z).

TILA and Reg Z have been amended and updated several times throughout the years. On July 21, 2010, TILA’s rule making authority was transferred from the Federal Reserve Board to the Consumer Financial Protection Bureau (CFPB) pursuant to provisions enacted by the Dodd–Frank Wall Street Reform and Consumer Protection Act in July 2010. Pub.L. 111–203, H.R. 4173.

TILA was amended by the Dodd-Frank Act, as relevant here, adding requirements that applied to creditors, assignees, and servicers regarding the sending and content of periodic billing statements for mortgage borrowers. Pub.L. 111–203, § 1420, enacted as 15 U.S.C. § 1638(f).

The CFPB issued several new regulations as an updated Reg Z, implementing several provisions of TILA as amended by Dodd-Frank and published as 12 C.F.R. 1026, et seq.

Effective January 10, 2014, the CFPB published several regulations governing the servicing of mortgage loans, and specifically the requirements of servicers to send periodic billing statements, and the required form and content of the statements. The CFPB issued the periodic billing statement regulations under the authority of TILA section 128(f), codified in 15 U.S.C. § 1638(f). See also 38 Fed. Reg. 10958-59 (discussing statutory authority under TILA section 128(f) for periodic billing statement regulations and other loan information requirements).

These regulations contained a broad exception for borrowers in bankruptcy, or whose personal liability on a mortgage debt was discharged in bankruptcy, where servicers were not required to send periodic billing statements. See Former 12 C.F.R  1026.41(e)(5), comment 1-3.

It was common for consumer debtors who filed Chapter 7 and received a discharge to stop receiving mortgage statements as soon as the petition for relief was filed, and never to receive the statements again unless they had reaffirmed the mortgage debt–a rare practice in Oregon. Consumers in Chapter 13 sometimes did not receive statements during the plan period, and had to rely on required notices filed with the court, which sometimes were not timely filed, or not filed at all, to know if their mortgage payment was changing due to escrow or had incurred fees.

Changes to the Mortgage Statement Requirements for Borrowers During and Following Bankruptcy

Effective April 19, 2018, the CFPB’s final amended rules governing the mortgage borrower’s rights to periodic billing statements for their residential mortgage loans provided consumer borrowers rights to statements during and following bankruptcy cases.

Below is a brief summary of the changes to 12 C.F.R. 1026.41(e) as a result of the amendment. The new text of the regulation is more detailed than its predecessor and can be viewed here.

Requirement to Send Statements and Updated Exemption Rules – The Borrower Is in Control

Prior to the amendment there was a blanket exception for sending periodic statements to borrowers in bankruptcy. The new regulation as amended added a two-part test for when a servicer is initially not required to send statements, and both parts must be met. 12 C.F.R. 1026.41(e)(5)(i). The first prong requires the borrower to be a debtor in an active bankruptcy case or have discharged personal liability for the mortgage loan in question. 12 C.F.R. 1026.41(e)(5)(i)(A). These requirements mirror the only ones under the previous version of the rule. Now, in order to be initially exempt from sending statements, one of the following must also be true: The consumer requests in writing that the servicer stop sending statements; The most recent chapter 13 plan provides for surrender of the residential property, avoidance of the mortgage lien, or does not provide for ongoing payments or cure of any default; an order avoiding the mortgage lien, granting the mortgage creditor relief from stay, or otherwise requiring statements to be stopped is entered by the court; or in chapter 7 the debtor’s statement of intention for the property states surrender AND no partial or full payment has been made since the case is filed. 12 C.F.R. 1026.41(e)(5)(i)(B).

The big takeaway for consumer borrowers and their bankruptcy counsel is that even if the lender may initially qualify for an exemption, the borrower has the power to elect to receive statements and disqualify the servicer from the exemption. 12 C.F.R. 1026.41(e)(5)(ii). Any borrower on the loan may request the statements be sent, including by an agent of the borrower, such as a borrower’s attorney. 81 Fed. Reg. 72323.

Modified Statements in Bankruptcy and Post-Discharge.

The recent regulation added a section to 12 C.F.R. 1026.41 modifying the requirements of what information is in a periodic billing statement for a mortgage loan during or following a borrower’s bankruptcy. Generally there are limitations on personal liability, the way some fees are reported is limited, and the amount due is not required to be displayed prominently. 12 C.F.R. 1026.41(f)(1)&(2). The text of new paragraph f and related comments can be found here.

There are specific modifications required for periodic billing statements sent to mortgage borrowers who are in chapter 13 (and chapter 12). 12 C.F.R. 1026.41(f)(3). The modifications essentially implement a common-sense approach of differentiating between pre-petition arrears and payments thereon through the chapter 13 plan and post-petition ongoing payments and fees due. The “amount due” may be limited to the post-petition amounts due. 12 C.F.R. 1026.41(f)(3)(ii)&(iii). The statement must also include the pre-petition arrearage balance, total payments received since the last statement, and total pre-petition payments received since the inception of the bankruptcy case.  12 C.F.R. 1026.41(f)(3)(v). This will allow chapter 13 debtors and their counsel to track the proper application of payments on the arrearages, which before was potentially done behind a curtain – with borrowers not knowing the impact of the payment on pre-petition arrears being received and applied or if the mortgage servicer was delaying proper application.

Timing for Compliance – Single-Statement Exemption

Once the triggering event occurs—including the borrower filing for bankruptcy, a servicer becoming disqualified for an applicable exemption, or non-modified statements being required following reaffirmation or non-discharge of mortgage liability following bankruptcy completion—the servicer is excused from complying for the first statement that is due to have been sent had the triggering event not occurred. Thus, the servicer must comply not with the first immediately forthcoming statement, but the second, following the triggering event. 12 C.F.R. 1026.41(e)(5)(iv). This exemption was a late amendment to the final rule, published by the CFPB on March 22, 2018. 83 Fed. Reg.10553-59.