Ombudsman advises Portland Water Bureau to stop charging returned payment fees

PORTLAND, Ore. (KOIN) — The Portland Water Bureau has been advised to stop imposing returned payment fees after an audit found that it overcharged numerous customers.

The Ombudsman’s Office revealed it opened an investigation into PWB’s practices as a result of a customer complaint from December 2023. The resident claimed they were forced to pay the returned payment fees “due to circumstances beyond their control,” and the bureau refused to issue a refund.

In the ensuing investigation, city auditors discovered that PWB raised its returned payment fee from $25 to $35 in July 2008 — even though Oregon law didn’t allow the agency to charge the increased fee until January 2012.

The ombudsman determined the bureau accrued $40,075 in overcharges within that more-than-three-year period, based on records showing there were 1,145 returned payments last year.

City officials explained banks charge PWB an average of $16 per returned payment, and the bureau spends about $82.25 recovering each loss. Auditors described this as an “inefficient use of resources and loss for ratepayers.”

According to the report, the fees also exacerbate inequity among some demographics.

“The Water Bureau’s 2021-2025 Equity Plan says the Bureau values anti-racism and affordability,” Deputy Ombudsman Andy Stevens wrote. “The disproportionate impact of fees for inadequate funds on certain socioeconomic groups may be out of step with the Water Bureau’s equity values.”

Stevens additionally argued these fees aren’t necessarily an effective deterrent for customers who haven’t submitted payments due to financial hardship.

Auditors advised the bureau to tell customers who were previously overcharged they are now entitled to a refund. The agency was also urged to stop imposing returned payment fees in the current fiscal year, and instead rely on carrying charges or late payment fees — which are charged seven days or 14 days later.

In response, PWB Interim Director Edward Campbell said the bureau is working to provide bill credits to residents who were overcharged from July 2008 to December 2011.

He also said officials are considering dropping the returned payment fees as part of the current fee, policy, and procedure equity review process.