The governor of Washington has signed a bill into law that re-defines what constitutes a debt buyer and makes those debt buyers provide additional information about the underlying debt when bringing legal actions against individuals, in an attempt to “provide more transparency,” said the bill’s sponsor, who called it one of the “strongest” bills of its kind in the nation.
The bi-partisan legislation, Substitute House Bill 2476, was sponsored by Rep. Amy Walen, a Democrat in the Washington House of Representatives. It adds on to the Collection Agency Act that was passed in the Washington Legislature last year.
“Debt buying practices are often deception, and the ones paying the price are Washington’s working families,” said Rep. Walen, in a statement. “When people fall into debt, they should be supported in paying back that debt without sacrificing basic needs.”
Under the new law, debt buyers are defined as, “any person or entity that is 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 such claims.” Previously, that was included in the definition of a collection agency.
Debt buyers are now prohibited from
- Bringing any legal action against a debtor without attaching to the complaint a copy of the contract or other writing evidencing the original debt that contains the signature of the debtor, or
- If a claim is based on a credit card debt for which a signed writing evidencing the original debt does not exist, a copy of the most recent monthly statement recording a purchase transaction, payment, or other extension of credit and, if the claim is based on a breach of contract, a copy of the terms and conditions in place at the time of the most recent monthly statement recording a purchase transaction, payment, or extension of credit must also be attached; or
- If a claim is based on an electronic transaction for which a signed writing evidencing the original debt never existed, a copy of the records created during the transaction evidencing the debtor’s agreement to the debt and recording the date and terms of the transaction and information provided by the debtor during the transaction.
Debt buyers are also prohibited from seeking default judgments unless they have:
- The original account number at charge-off
- The original creditor at charge-off
- The amount due at charge-off or, if the balance has not been charged off, an itemization of the amount claimed to be owed, including the principal, interest, fees, and other charges or reductions from payment made or other credits;
- An itemization of post charge-off additions, if any;
- The date of the last payment, if applicable, or the date of last transaction;
- If the account is not a revolving credit account, the date debt was incurred; and
- A copy of the assignment or other writing establishing that debt buyer is the owner of the debt. If the debt was assigned more than once, each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent sale.
Debt buyers must also provide the following disclosures when bringing legal action against individuals:
- That the action is being brought by, or for the benefit of, aperson or entity that is engaged in the business of purchasing delinquent or charged off claims for collection purposes;
- The date the claim or obligation was purchased;
- The identity of the person or entity from whom or which the claim or obligation was purchased;
- That the plaintiff may have purchased this claim or obligation for less than the value stated in the complaint;
- If the claim or obligation was at any time sold without any representation or warranty of accuracy, a statement to that effect;
- That the action is being commenced within, and is not barred by an applicable statute of limitations.
