Although lawmakers failed to tighten laws around the increasingly controversial debt collection industry during this legislative session, Attorney General Ellen Rosenblum is continuing the crackdown on the industry that began under her predecessor, John Kroger.
The Oregon Department of Justice today announced it is barring a Texas debt collection firm from operating in Oregon and seeking hefty monetary penalties.
Here's the release from DOJ spokesman Jeff Manning:
The Oregon Department of Justice and the Oregon Department of Consumer and Business Services have obtained a court order prohibiting World Law Debt and several affiliate companies from doing business in the state.
The two agencies on Monday sued World Law Debt accusing the Texas debt settlement company of multiple violations of Oregon’s Unlawful Trade Practices Act, including charging excessive fees and claiming inaccurately that it had Oregon attorneys on staff handling client cases. The complaint also alleged the company financially abused its customers 65 years old and older.
The lawsuit alleges that of the $1.5 million World Law Debt collected from Oregon clients it actually paid just $275,211 to their creditors and retained more than $960,000 in fees. The state obtained a temporary restraining order Tuesday prohibiting World Law Debt and its affiliates from doing business in Oregon. It will seek a longer-term ban later this month.
“The DOJ strives to protect all Oregonians, particularly the elderly and other vulnerable segments of the community,” said Oregon Attorney General Ellen Rosenblum. “Teaming with the Department of Consumer and Business Services is an effective way to offer Oregonians the tough consumer protection they deserve.”
World Law Debt came to Oregon in 2009 offering to help debt-burdened Oregonians negotiate with their creditors, work out a payment plan and actually lower the amount they owed, according to the complaint, filed Monday in Multnomah County Circuit Court. World Law Debt’s Oregon customers authorized the company to take monthly withdrawals from their bank accounts, according to the complaint. These withdrawals were used to establish savings accounts for individual customers. When the consumer has saved enough, World Law claimed it would contact the creditors and negotiate a lump-sum payment or payment plan.
In response to consumer complaints, Oregon lawmakers enacted new restrictions on the debt settlement industry in 2009, limiting the fees they charge and requiring they register with the Department of Consumer and Business Services. The department fined World Law Debt $70,000 last September for failing to register before doing business in Oregon and other violations of the law.
World Law Debt has not paid the fine, remains unregistered and has continued to operate, signing up at least a hundred new Oregon clients since it got fined, according to the lawsuit.
The Department of Justice is seeking more than $10 million in civil penalties, $25,000 for each of the 425 contracts the company entered into with Oregonians while it was not properly registered. The state is also demanding World Law Debt fully refund its Oregon customers.
Oregon has 67 businesses that are licensed with the Department of Consumer and Business Services to help people with debt, including nonprofit credit counseling organizations. For Oregonians considering doing business with debt management companies, the department advises they first make sure the company is properly registered. More information is available at 503-378-4140 or toll-free at 866-814-9710.
In addition to World Law Debt, a number of related entities are named as defendants. They include Swift Rock Financial, Orion Processing, World Law Group, World Law Direct, World Law Plan, World Law Processing, World Law Debt Assistance and several other similarly named companies.