April 20, 2020: On March 18, 2020, as the COVID-19 pandemic was taking over the news cycle, Washington Governor Jay Inslee signed into law HB 2476 by Rep. Amy Wallen (Chapter 30 of the Laws of 2020). This new law which takes effect on June 11, 2020, should be analyzed carefully by debt buyers and law firms that represent debt buyers.

HB 2476 provides detailed requirements that debt buyers must comply with when litigating cases in Washington State. Please note, this act applies prospectively to delinquent or charged off claims purchased by a debt buyer on or after June 11, 2020. While this law is similar to Colorado’s 2017 debt buyer law, there are some important differences which are noteworthy.

Specifically, the law requires debt buyers:

To attach a copy of the contract or other writing evidencing the original debt containing 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 must be attached 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.

To provide the court the following evidence, inclusive of the document(s) referenced above, when requesting a default judgment against a debtor:

    • 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 the last transaction;
    • If the account is not a revolving credit account, the date the debt was incurred; and
    • A copy of the assignment or other writing establishing that the 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.

To provide the following disclosures in no smaller than ten-point type in the complaint when bringing a legal action against a debtor (these provisions along with the “terms and conditions” provision mentioned above differ from the Colorado debt buyer law):

    • That the action is being brought by, or for the benefit of, a person 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; and
    • That the action is being commenced within, and is not barred by, an applicable statute of limitations.

It should be noted that the original proposal contained a large number of problematic provisions which were removed or altered based on negotiations RMAI had with the consumer advocates and the bill sponsor. These problematic provisions would have required, among other things: pre-charge-off itemization [removed from bill]; the most recent terms and conditions [changed to limit it to only breach of contract claims]; multiple monthly statements [changed to last activity statement]; data and documentation requirements connected to the original creditor [changed to the charge-off creditor]; account-level chain of title [changed to portfolio chain of title]; the sale price of the claim or obligation [removed from bill]; any disclaimer of the accuracy of any information in the sale contract would have required a statement that the claim or obligation was sold without any representation or warranty of accuracy [removed from bill]; sending consumer notices in Spanish [removed from bill]; and providing the debtor a checklist on how to reply to the notice of the lawsuit [removed from bill].

RMAI certified businesses should not have any problems complying with this new law as the required data and documents are already required by the Receivables Management Certification Program. The one provision which may cause some challenges is the requirement to have a copy of the “terms and conditions” in place at the last activity statement. It will be important for debt buyers to start clarifying which terms and conditions are being transmitted on a go forward basis on sales taking place on or after June 11, 2020.

RMAI strongly recommends that its members share this member alert with any creditor, debt buyer, collection agency, and law firm it transacts business with as well as those internally responsible for compliance, purchase/sale, and legal operations.

This alert is intended for members of the Receivables Management Association International and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.