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Oregon law provides hard lesson for debt collection advocates

Jan 07, 2014 Philip Burgess

Debt collection and check enforcement programs are an essential aspect of any strong local economic landscape in the United States. Both public and private organizations offer such debt relief services to help enterprises and government groups recover outstanding debts and maintain a healthy cash flow. Without such operations, businesses and government agencies can face funding issues if their debts go uncollected.

In Oregon's Lane County, District Attorney Alex Gardner has been overseeing a check enforcement program aimed at helping local businesses recover losses from bad checks and outstanding debts. According to the Lane Country website, the program is especially beneficial for area merchants because they receive full restitution for any losses without being required to pay legal expenses or other fees.

Also, the initiative includes an educational course for first-time offenders, which limits the chances for repeat offenses and creates a healthier business environment in Lane County.

Legislation threatens program
The enforcement policy has been successful, but thanks to a new state law, Gardner recently announced that he is scrapping the program to avoid potential legal challenges. The Register-Guard recently reported that Gardner has decided to end the bad check initiative because legislation due to go into effect on Jan. 1 will put check cases into the same category as consumer debt. As such, he believes the program will be subjected to the policies in the Fair Debt Collection Practices Act (FDCPA), an aggressive and complex set of laws that regulates debt collection efforts.

"If there's even a 20 percent chance we might fall afoul of the Fair Debt Collection Act, then we simply can't risk it," Gardner said, according to the source. "We can't afford to litigate this."

Across the country, aggressive laws that limit the ability of organizations within the debt services industry to operate undermine the positive steps that Gardner and other officials make to support local businesses. This should provide a lesson to lawmakers: Instead of making debt collection laws more stringent, they should be simplified. Complex legal policies that dictate what collection agents can and can't do put useful programs such as the Lane Country bad check initiative at risk.

According to The Register-Guard, $250,000 in restitution checks have been recovered since 2004 from the program. For local small businesses, such funding can be vital for survival. By failing to keep these programs afloat, lawmakers also let down entrepreneurs.