Ore. bill would ban bad check collection practice

SALEM, Ore. (AP) -- Debt collectors would have to stop using government stationery to send letters compelling people accused of writing bad checks to pay up, under a bill the Oregon House passed Friday.

The bill, which passed 47-2, targets the practice of private companies using a district attorney's letterhead to send notices to people who write bad checks. The legislation would prohibit all public agencies and public officials from allowing debt collectors to use their seal or letterhead.

Critics say the collection practice is deceptive and has misled people to believe they are dealing with a government agency.

"It isn't appropriate," said Sen. Floyd Prozanski, D-Eugene, who spearheaded the legislation.

An investigation by The Oregonian last year found that thousands of state residents had received letters from collections companies that bear the name and seal of a local district attorney's office. The notices, however, are not being sent by a state prosecutor but instead by private companies under contract with the attorney's office.

"This system is set up and maintained in such a way as to misrepresent which entity is conducting the collection," Becky Straus of Oregon's American Civil Liberties Union wrote in support of the bill. "District attorneys are government actors and perform a public function, but private check collection companies are not, and district attorneys should not allow for these companies to represent themselves as such."

A handful of Oregon prosecutors' offices contract with private companies to run bad check diversion programs. Some offices receive a percentage or fee from the companies for successful collections.

Some letters threaten recipients, warning that they could face jail time if they don't immediately pay their debt plus additional fees.

The extra fees, which Prozanski said can be as much as $300, mostly pay for a financial education class that recipients are directed to take. The educational course provides participants with basic financial advice and is intended to discourage people from writing bad checks in the future.

Prozanski provided lawmakers with a copy of a letter sent by a debt collection company contracted by the Lane County district attorney's office. The letter on the DA's letterhead warns the recipient that a warrant may be issued if he or she doesn't pay up. It also tacks on an additional $125 fee for a "financial training" class.

The Lane County district attorney's office did not return calls seeking comment.

Chuck Sparks, a Multnomah County chief deputy district attorney, said he understands the Legislature's concerns.

"We are considering various approaches to addressing Sen. Prozanski's concerns and will certainly work within the confines of a new law," Sparks said.

Prozanski said there is nothing stopping prosecutors from including a letter from the district attorneys' office to accompany the information collection service companies send to recipients.

The Multnomah County district attorney's office recently suspended its privatized bad check enforcement program, Sparks said.

The bill now goes to the Senate, which approved an earlier version and must sign off on changes.