Washington Passes Payday Loan Collection Law

Washington Governor Gregoire

Washington State Governor Gregoire signed a new law today that restricts check cashers’ and payday lenders’ ability to collect on consumer debts. Payday Loans have gotten a lot of attention in the Washington Legislature this month, but this bill is very interesting in its definition of “harassment.”

This bill has some relatively benign elements, such as making it illegal for payday loan companies to impersonate a police officer and make false threats to consumers. I’m pretty sure these are already illegal activities in all 50 states, right?

Yet, this bill also bans the so-called “field calls” frequently used by payday loan collectors. Employees of payday loan companies often take off into “the field,” showing up at consumers homes or places of work, usually delivering a letter that notifies them of their payday loan debt. This is the definition of harassment, since the same payday companies have already called 2-3 times per day to remind the customer that they have fallen behind on their payday loan. It is good to see this horrible collection tactic put out of commission in Washington, at least for payday loan collectors.

However, the real ground-breaking aspect of this law is its definition of collection harassment. The new Washington law defines payday loan collection harassment as making contact with the customer more than three time in a week. Further, it defines a week as the 7 day period between Sunday and Saturday and defines a contact as a letter, e-mail, voice mail or phone conversation with a delinquent customer. This is a great achievement in collection rights, since it goes beyond FDCPA and definitively defines collections harassment.

Also of note is that this bill also applies to any debt collectors or debt collection agencies that work with payday loan companies to collect on debts of Washington consumers.

It just makes sense. If you are contacted 3 out of 7 days to be reminded about your delinquent payday loan, you are probably not forgetting about it.

My only question is why is Washington singling out payday loans and not making this law apply to all consumer debt collection in Washington? Shouldn’t Washington consumers receive the same protections from credit card debt collectors or delinquent mortgage collectors?

Tags: Collection Letters, Debt Collectors, FDCPA, Payday Loan Collectors, Payday Loans, Washington