Chapter 468 Oregon Laws 1999

Session Law

AN ACT

HB 2316

Relating to collection agencies; creating new provisions; and amending ORS 697.005 and 697.058.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 697.005 is amended to read:

697.005. As used in ORS 697.005 to 697.095:

(1)(a) "Collection agency" means:

(A) Any person directly or indirectly engaged in soliciting claims for collection, or collecting or attempting to collect claims owed, due or asserted to be owed or due to another person or to a public body;

(B) Any person who directly or indirectly furnishes, attempts to furnish, sells or offers to sell forms represented to be a collection system even though the forms direct the debtor to make payment to the creditor and even though the forms may be or are actually used by the creditor in the creditor's own name;

(C) Any person who in attempting to collect or in collecting the person's own claim uses a fictitious name or any name other than the person's own [which] that indicates to the debtor that a third person is collecting or attempting to collect the claim;

(D) Any person in the business of engaging in the solicitation of the right to repossess or in the repossession of collateral security due or asserted to be due to another person; or

(E) Any person who in the collection of claims from another person:

(i) Uses any name other than the name regularly used in the conduct of the business out of which the claim arose; and

(ii) Engages in any action or conduct that tends to convey the impression that a third party has been employed or engaged to collect the claim.

(b) "Collection agency" does not include:

(A) Any individual engaged in soliciting claims for collection, or collecting or attempting to collect claims on behalf of a registrant under ORS 697.005 to 697.095, if the individual is an employee of the registrant;

(B) Any individual collecting or attempting to collect claims for not more than three employers, if all collection efforts are carried on in the name of the employer and the individual is an employee of the employer;

(C) Any person who prepares or mails monthly or periodic statements of accounts due on behalf of another person if all payments are made to that other person and no other collection efforts are made by the person preparing the statements of accounts;

(D) Any attorney-at-law rendering services in the performance of the duties of an attorney-at-law;

(E) Any licensed certified public accountant or public accountant rendering services in the performance of the duties of a licensed certified public accountant or public accountant;

(F) Any bank, mutual savings bank, consumer finance company, trust company, savings and loan association, credit union or debt consolidation agency;

(G) Any real estate licensee or escrow agent licensed under the provisions of ORS chapter 696, as to any collection or billing activity involving a real estate transaction or collection escrow transaction of the licensee or escrow agent;

(H) Any individual regularly employed as a credit person or in a similar capacity by one person, firm or corporation that is not a collection agency as defined in this section;

(I) Any public officer or any person acting under order of any court;

(J) Any person acting as a property manager in collecting or billing for rent, fees, deposits or other sums due landlords of managed units;

(K) Any person while the person is providing billing services. A person is providing billing services for the purposes of this subparagraph if the person engages, directly or indirectly, in the business or pursuit of collection of claims for other persons, whether in the other person's name or any other name, by any means that:

(i) Is an accounting procedure, preparation of mail billing or any other means intended to accelerate cash flow to the other person's bank account or to any separate trust account; and

(ii) Does not include any personal contact or contact by telephone with the person from whom the claim is sought to be collected;

(L) Any person while the person is providing factoring services. A person is providing factoring services for the purposes of this subparagraph if the person engages, directly or indirectly, in the business or pursuit of:

(i) Lending or advancing money to commercial clients on the security of merchandise or accounts receivable and then enforcing collection actions or procedures on such accounts; or

(ii) Soliciting or collecting on accounts that have been purchased from commercial clients under an agreement whether or not the agreement:

(I) Allows recourse against the commercial client;

(II) Requires the commercial client to provide any form of guarantee of payment of the purchased account; or

(III) Requires the commercial client to establish or maintain a reserve account in any form;

(M) Any individual employed by another person who operates as a collection agency if the person does not operate as a collection agency independent of that employment;

(N) Any mortgage banker as defined in ORS 59.840; [or]

(O) Any public utility, as defined in ORS 757.005, any telecommunications utility, as defined in ORS 759.005, any people's utility district, as defined in ORS 261.010, and any cooperative corporation engaged in furnishing electric or communication service to consumers[.]; or

(P) Any public body or any individual collecting or attempting to collect claims owed, due or asserted to be owed or due to any public body, if the individual is an employee of the public body.

(2) "Collection system" means a scheme intended or calculated to be used to collect claims sent, prepared or delivered by:

(a) A person who in collecting or attempting to collect the person's own claim uses a fictitious name or any name other than the person's own [which] that indicates to the debtor that a third person is collecting or attempting to collect the claim; or

(b) A person directly or indirectly engaged in soliciting claims for collection, or collecting or attempting to collect claims owed or due or asserted to be owed or due another person.

(3) "Claim" means any obligation for the payment of money or thing of value arising out of any agreement or contract, express or implied.

(4) "Client" or "customer" means any person authorizing or employing a collection agency to collect a claim.

(5) "Debtor" means any person owing or alleged to owe a claim.

(6) "Debts incurred outside this state" means any action or proceeding that:

(a) Arises out of a promise, made anywhere to the plaintiff or a third party for the plaintiff's benefit, by the defendant to perform services outside of this state or to pay for services to be performed outside of this state by the plaintiff;

(b) Arises out of services actually performed for the plaintiff by the defendant outside of this state or services actually performed for the defendant by the plaintiff outside of this state, if the performance outside of this state was authorized or ratified by the defendant;

(c) Arises out of a promise, made anywhere to the plaintiff or a third party for the plaintiff's benefit, by the defendant to deliver or receive outside of this state or to send from outside of this state goods, documents of title or other things of value;

(d) Relates to goods, documents of title or other things of value sent from outside of this state by the defendant to the plaintiff or a third person on the plaintiff's order or direction;

(e) Relates to goods, documents of title or other things of value actually received outside of this state by the plaintiff from the defendant or by the defendant from the plaintiff, without regard to where delivery to carrier occurred; or

(f) Where jurisdiction at the time the debt was incurred was outside of this state.

(7) "Department" means the Department of Consumer and Business Services.

(8) "Director" means the Director of the Department of Consumer and Business Services.

(9) "Out-of-state collection agency" means a collection agency located outside of this state whose activities within this state are limited to collecting debts incurred outside of this state from debtors located in this state. As used in this subsection, "collecting debts" means collecting by means of interstate communications, including telephone, mail or facsimile transmission from the collection agency location in another state on behalf of clients located outside of this state.

(10) "Person" includes an individual, firm, partnership, trust, joint venture, association, limited liability company or corporation.

(11) "Public body" means:

(a) The state and any branch, department, agency, board or commission of the state;

(b) Any city, county, district or other political subdivision or municipal or public corporation and any instrumentality thereof; and

(c) Any intergovernmental agency, department, council, joint board of control created under ORS 190.125 or other like entity, which is created under ORS 190.003 to 190.125 and which does not act under the direction and control of any single member government.

[(11)] (12) "Registered" or "registrant" means any person registered under ORS 697.005 to 697.095 or registered or licensed as a collection agency under the laws of another state.

[(12)] (13) "Statement of account" means a report setting forth amounts billed, invoices, credits allowed or aged balance due.

SECTION 2. ORS 697.058 is amended to read:

697.058. (1) Except as provided in subsection (9) of this section, every collection agency[, other than an out-of-state collection agency,] shall keep a record of all sums collected by it, and of all disbursements made by it, and shall maintain and keep all such records and all customers' funds within this state. Collection agencies[, other than out-of-state collection agencies,] shall maintain accounting records of collections for and payments to customers for a period of six years from the date of the last entry thereon. Collection agencies [other than out-of-state collection agencies] shall keep other records for a period of two years from the date of the last entry thereon. [No collection agency covered by this section] Collection agencies, or any employee thereof, shall not intentionally make any false entry in any collection agency record or intentionally mutilate, destroy or otherwise dispose of any such record within the time limits provided in this section. This subsection does not apply to out-of-state collection agencies.

(2) Except as provided in subsection (9) of this section, every collection agency[, other than an out-of-state collection agency,] shall establish and maintain a regular, active business office in this state for the purpose of conducting business in this state. The office shall be open to the public during reasonable, stated business hours. This subsection does not apply to out-of-state collection agencies.

(3) [No] A collection agency shall not commingle the money of customers with other moneys.

(4) Except as provided in subsection (9) of this section, a collection agency[, other than an out-of-state collection agency,] shall maintain a separate trust account in this state for customers' funds and shall keep funds in such trust account until disbursed to the customer. This subsection does not apply to out-of-state collection agencies.

[(4)] (5) Except as provided in subsection (9) of this section, every collection agency [which] that requires customers to pay an amount for services prior to the time that the services are rendered shall maintain a separate trust account in this state for prepayments and shall keep prepayment funds in the trust account for 180 days or until the services for which prepayment is made are performed, whichever occurs first.

[(5)] (6) Every collection agency, within 30 days after the close of each calendar or fiscal month, shall report and pay to its customers the net proceeds due and payable of all collections made during that calendar or fiscal month. When the net proceeds are less than $5 at the end of any calendar or fiscal month, payments may be deferred for a period not to exceed three months.

[(6)] (7) Upon the [director's own] motion of the Director of the Department of Consumer and Business Services or upon receipt of a complaint by a customer of the collection agency, the director may audit the collection agency's trust accounts with respect to any violation by the collection agency of this section. If the director finds any discrepancy in the trust accounts, the director also may audit the operating account of the collection agency. The collection agency shall pay the reasonable cost of an audit under this section, as determined by the director.

[(7)] (8) If a collection agency does not pay the cost of the audit determined under subsection [(6)] (7) of this section, the director may assign the delinquent account to the Department of Revenue for collection in the manner that other debts are collected under ORS 293.250.

(9) The director, by rule or order, may exempt a collection agency from the requirements of subsection (1), (2), (4) or (5) of this section if the collection agency:

(a) Satisfies the director that the books, records and trust accounts of the collection agency may be examined by the director without undue delay or expense;

(b) Provides for timely and convenient remittance of debtor payments and funds owed to the customer; and

(c) Complies with all conditions the director may require relating to additional bonding requirements and to provisions for auditing financial statements of trust accounts, receiving payments from and communicating with debtors, and remitting funds to customers.

SECTION 3. (1) Except as provided in subsection (2) of this section, the amendments to ORS 697.005 by section 1 of this 1999 Act apply to collection agencies operating in this state on and after the effective date of this 1999 Act.

(2) The amendments to ORS 697.005 by section 1 of this 1999 Act do not apply to any collection agency operating under a contract with a public body on the effective date of this 1999 Act. In the case of a collection agency operating under a contract with a public body on the effective date of this 1999 Act, the amendments to ORS 697.005 by section 1 of this 1999 Act shall apply to the collection agency on the date the contract expires or one year following the effective date of this 1999 Act, whichever is sooner.

(3) The amendments to ORS 697.058 by section 2 of this 1999 Act apply to collection agencies holding registrations issued prior to, on or after the effective date of this 1999 Act.

Approved by the Governor July 6, 1999

Filed in the office of Secretary of State July 6, 1999

Effective date October 23, 1999

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