Persels & Associates, LLC v. Department of Consumer & Business Services

398 P.3d 428, 286 Or. App. 315, 2017 Ore. App. LEXIS 813
CourtCourt of Appeals of Oregon
DecidedJune 21, 2017
DocketDM120049; A157430
StatusPublished

This text of 398 P.3d 428 (Persels & Associates, LLC v. Department of Consumer & Business Services) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Persels & Associates, LLC v. Department of Consumer & Business Services, 398 P.3d 428, 286 Or. App. 315, 2017 Ore. App. LEXIS 813 (Or. Ct. App. 2017).

Opinion

LAGESEN, J.

Petitioner Persels and. Associates, LLC, (Persels) is a law firm and Maryland limited liability company. The primary services that Persels provides are debt settlement services. For a fee, Persels offers to collect money from a consumer and then, once it has collected enough money, negotiate with a consumer’s creditors to reduce the consumer’s unsecured debt to an amount that the consumer can pay using the collected funds. Persels offers these services to consumer debtors nationwide, including those located in Oregon. Although ORS 697.612 generally requires those who do what Persels does to register with the director of the Department of Consumer and Business Services (DCBS) before providing—or offering to provide—such services in Oregon, Persels did not register with the director before it began offering its services to Oregon consumers. Following a contested case, the director determined that Persels committed 1,801 violations of ORS 697.612 when, without having registered with the director, Persels held paid consultations with 1,801 Oregon consumers at which Persels offered—for a fee—to provide its services to those consumers. The director issued a final order directing Persels to cease and desist from ongoing violations of the Oregon laws governing debt management service providers and to pay an assessed $500,000 civil penalty.

Persels seeks judicial review of that order under ORS 183.482. On review, Persels asserts that the director erred in concluding that its conduct violated Oregon law. It contends that it had no obligation to register with the director because ORS 697.612(3)(b) exempts some attorneys from the registration requirement. Persels argues that it is entitled to the benefit of that exemption. Alternatively, Persels asserts that it committed at most a single violation of ORS 697.612, and that the director therefore erred in determining that it had committed 1,801 violations. For the reasons that follow, we disagree with Persels on both points. We therefore affirm.

[318]*318I. STANDARD OF REVIEW

The director resolved the contested case on the parties’ cross-motions for summary determination.1 Under these circumstances, we review the director’s order for errors of law. ORS 183.482(8)(a); Hamlin v. PERB, 273 Or App 796, 798-99, 359 P3d 581 (2015) (stating standard of review applicable to orders in contested cases arising from a grant of summary determination).

II. BACKGROUND

A. Regulatory Framework

ORS 697.602 to 697.842 governs the provision of “debt management services” in Oregon. The legislature originally enacted those statutes in 1983, and then amended them in 2009. It did so to strengthen regulation of the debt management services industry in response to “new and troubling forms of debt management companies” using business models that the statutes, prior to amendment, did not reach. Testimony, House Consumer Protection Committee, HB 2191, Feb 9, 2009, Ex 4 (written statement of David Tatman, Administrator, Division of Finance and Corporate Securities, Department of Consumer and Business Services); see generally Or Laws 2009, ch 604; see also Matthew Brock, As Cats are Drawn to Cream: Expanding Debt Settlement Regulation to Traditionally-Exempt Entities, 47 Colum J L & Soc Probs 385, 404-11 (2014) (discussing the different business models employed by debt management companies to [319]*319avoid regulation under existing state laws during the early part of the twenty-first century).2 As the administrator of the DCBS Division of Finance and Corporate Securities who proposed the amendments explained, greater regulatory oversight was required because these new forms of debt management services were extracting significant fees from debt-ridden consumers and then providing little or no assistance of value to the consumer:

“In the past few years, we have seen the birth and growth of debt settlers or debt eliminators who use a business model not under our regulation. For example, debt elimination providers claim the ability to eliminate various types of debt for an upfront fee. They claim to be able to negotiate with creditors, usually credit card companies, but also other creditors, and eliminate principal and interest in return for a single lump sum payment that significantly lowers the balance owed. Most of us encountered the advertisements on radio, television or the Internet in which debt settlement companies mention incredible results for previous clients. Claims like ‘debt reduced by 50%, 60% or even 75%’ and ‘debt settled in 12 to 30 months.’
“Additionally, these companies inappropriately advise a consumer to stop communicating with a creditor—which is generally to the detriment of the consumer. Debt elimination providers do not accept money from a consumer for redistribution to the consumer’s creditors. Instead, debt settlement or debt eliminator companies have the debtor save money in the debtor’s bank account, after first paying the debt settlement company a hefty upfront fee, until such time as the debt settlement company has negotiated a reduction in the amount to be paid to settle the debt and then instructs the debtor to pay the creditor.
“Unfortunately, the delay in contacting or negotiating the debt may take several to many months’ time during which there has been no contact or payment to the creditor. In the meantime, creditors have filed suit to collect [320]*320the debt, obtain a judgment and begin garnishing wages and bank accounts. We have talked to representatives of the Oregon Collectors Association, the organization that represents collection agencies in Oregon. They advise that many of their collectors do not believe debt settlement companies provide a meaningful resolution to the debt they are collecting and generally disregard proposals from these companies.
“The scenario I describe is in the best of circumstances, when a genuine, if expensive and ineffective, effort may be made on behalf of a debtor. In worst-case scenarios, we have heard of debtors who provide a significant upfront fee and then vainly wait to hear back from the debt settlement company with further instructions. The end result is that the debtors have lost additional money and precious time in finding the best approach to their debt problems.”

Testimony, House Consumer Protection Committee, HB 2191, Feb 9, 2009, Ex 4 (written statement of David Tatman, Administrator, Division of Finance and Corporate Securities, Department of Consumer and Business Services).

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Related

Hamlin v. Public Employees Retirement Board
359 P.3d 581 (Court of Appeals of Oregon, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
398 P.3d 428, 286 Or. App. 315, 2017 Ore. App. LEXIS 813, Counsel Stack Legal Research, https://law.counselstack.com/opinion/persels-associates-llc-v-department-of-consumer-business-services-orctapp-2017.