Oregon Supreme Court Rules That Debt-Collecting Lawyers Are Subject to Consumer Protection Laws

Decision means lawyers cannot use "unconscionable tactics" when dealing with debtors.

By Nigel Jaquiss

The Oregon Supreme Court ruled on Thursday that lawyers who collect debts are subject to an Oregon consumer protection law called the Unfair Trade Practices Act, which prohibits "unconscionable tactics."

In 2011, the Oregon Department of Justice began an investigation of a Eugene lawyer named Daniel Gordon, who worked on behalf of debt collectors.

Gordon was prolific, according to court records.

“In 2010, the law firm pursued collection of more than 16,000 accounts, obtained judgments with respect to approximately 9,000 of those accounts, and collected on approximately 4,000,” the Supreme Court opinion says.
The DOJ, led by Attorney General Ellen Rosenblum, objected to Gordon’s practices, which the agency said included “a pattern and practice of filing thousands of breach of contract actions against credit card debtors and obtaining default judgments for attorneys’ fees and interest in a manner that apparently took advantage of the debtors’ legal ignorance, lack of resources and general belief that they could not fight the claim.” (Disclosure: Rosenblum is married to Richard Meeker, a co-owner of WW‘s parent company.)

Related: Banks send Daniel Gordon after people who don't pay their credit card bills. Who is watching how he operates?

Gordon sued DOJ in Lane County, arguing the Unfair Trade Practices Act should not apply to him and his law firm because they were merely acting as attorneys for the owners of the debt.

Gordon argued the Oregon State Bar, not the DOJ, has the authority to regulate lawyers. The Lane County court ruled in Gordon's favor.

The Oregon Court of Appeals reversed the lower court's ruling last year and the Supreme Court on Thursday affirmed that reversal. "The [Unfair Trade Practices Act] can apply to plaintiffs' debt collection litigation taken on behalf of their clients against third parties," says the opinion.

The ruling means that the high-pressure and sometimes deceptive tactics lawyers use to collect debts, and the practice of collecting unwarranted legal fees from consumers, could get them in trouble with DOJ.

"We are pleased that the Oregon Supreme Court has agreed with our view that lawyers' bad conduct is covered by Oregon's Consumer Protection law—the Unlawful Trade Practices Act—and that lawyers engaging in deceptive debt collection practices will face the same repercussions as any other individual who were to violate this law," Rosenblum said in a statement.

Willamette Week’s reporting has concrete impacts that change laws, force action from civic leaders, and drive compromised politicians from public office. Support WW's journalism today.