SENATE BILL REPORT

SHB 2476

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Passed Senate, March 3, 2020

Title: An act relating to debt buyers.

Brief Description: Concerning debt buyers.

Sponsors: House Committee on Civil Rights & Judiciary (originally sponsored by Representatives Walen, Duerr, Kloba, Kilduff, Leavitt, Lekanoff, Orwall, Davis, Doglio, Frame, Macri, Goodman and Ormsby).

Brief History: Passed House: 2/12/20, 96-0.

Committee Activity: Law & Justice: 2/19/20, 2/20/20 [DP].

Floor Activity:

Passed Senate: 3/03/20, 48-0.

Brief Summary of First Substitute Bill

  • Prescribes prohibited practices for a collection agency operating as a debt buyer and designates those prohibited practices as unfair practices under the Consumer Protection Act.

  • Requires a debt buyer provide disclosures at the time of bringing any legal action and provide specified evidence establishing the debt to the court with any request for a default judgment.

SENATE COMMITTEE ON LAW & JUSTICE

Majority Report: Do pass.

Signed by Senators Pedersen, Chair; Dhingra, Vice Chair; Padden, Ranking Member; Holy, Kuderer, Salomon and Wilson, L..

Staff: Shani Bauer (786-7468)

Background: In Washington, collection agencies are regulated by the Collection Agency Act (CAA). The CAA creates a licensing system for collection agencies, establishes a regulatory board, sets forth requirements and prohibited practices, and provides remedies. Collection agency means and includes:

No person or business may act as a collection agency without first acquiring a license from the Department of Licensing (DOL). DOL may deny, revoke, not renew, or suspend licenses for reasons related to conduct, financial circumstances, and noncompliance with the law.

The CAA sets forth a number of prohibited practices, such as collection agencies may not:

The operation of a collection agency without a license or engaging in a prohibited practice is an unfair practice under the Washington Consumer Protection Act. If a prohibited practice is committed by a licensee in the collection of a claim, no interest, collection costs, or delinquency fees over and above the original claim may be collected.

Summary of First Substitute Bill: A debt buyer is included in the definition of a collection agency and the term is independently defined as any person or entity engaged in the business of purchasing delinquent or charged off claims for collection purposes, whether it collects the claims itself or hires a third party for collection or an attorney for litigation in order to collect the debt.

Additionally, a debt buyer may not:

Engaging in a prohibited practice as outlined for a debt buyer is an unfair practice under the Washington Consumer Protection Act. If a prohibited practice is committed by a licensee in the collection of a purchased obligation, no interest, collection costs, or delinquency fees over and above the original claim may be collected.

This act applies prospectively to delinquent or charged off claims purchased by a debt buyer on or after the effective date of this section.

Appropriation: None.

Fiscal Note: Not requested.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: When a creditor is unable to collect debt, one option is to sell that debt to a debt buyer. As time goes on, the origin, timing, and payments all gets a little messy. The Center for Responsible Lending did a study of debt purchased by debt buyers. Over 90 percent of those debts ended in default, some due to uncertainty as to the origin of the debt. This bill will address that uncertainty and improve information to the debtor.

This bill has been well negotiated with consumer advocates and the industry. Many of these provisions are the equivalent to what has been adopted in other states which will bring consistency in practice.

Persons Testifying: PRO: Holly Chisa, Receivables Management Association International; Antonio Ginatta, Columbia Legal Services.

Persons Signed In To Testify But Not Testifying: No one.