The Water Bureau and three other City agencies will remove returned payment fees after an Ombudsman investigation pointed to the inequitable impact of these fees and the inefficiency of collecting them.

“The practice of charging returned payment fees was out of step with the City’s equity goals and an ineffective use of public resources,” said Andy Stevens, Deputy Ombudsman. “Removing them across the board is a step in the right direction and aligns with City values of anti-racism, equity and fiscal responsibility.”

Customers are charged returned payment fees if funds are not available in their bank accounts when a transaction is processed. Returned payments can be caused by issues beyond customer control, such as inaccurate billing information. Water Bureau customer Kerry Rasmussen brought such fees to the Ombudsman’s attention after incurring one when her billing details changed because of a bank merger.

“Normally, I would accept a small fee because I could not stay on top of my bills or accounts,” said Rasmussen. “But $35 seems absolutely criminal from a public entity where customers have no choice in provider.”

The Ombudsman’s April 2024 investigation found that returned payment fees have inequitable impacts on certain socioeconomic groups and that the Water Bureau spent more to collect the fees than the amount it received. In 2023, the Water Bureau spent $112,496.25 in bank fees ($16 per returned item) and operational costs ($82.25 per returned payment) and received $40,075 ($35 charge to customers per returned payment). This amounts to more than $72,000 in costs indirectly passed on to all ratepayers — roughly 40 cents per meter per year. In addition, the Ombudsman’s investigation revealed that the Water Bureau charged customers a higher fee than allowed under state law for three years.

The Ombudsman recommended that the Bureau refund customers who had been overcharged and remove the fee going forward. The Bureau did not immediately accept the recommendation to remove the fee, but confirmed in December 2024 that it will do so beginning in Fiscal Year 2025-26. It also credited a total of $10,270 to the accounts of 864 current Water customers who were previously overcharged.

Taking note of the Ombudsman’s recommendation to the Water Bureau, the Revenue Division took the proactive step of removing the fee. The Ombudsman then approached the two other bureaus that charge returned payment fees, the Bureau of Transportation and Fire & Rescue, and recommended they remove them as well. They also agreed to do so next fiscal year.

Rasmussen praised the Ombudsman’s Office for taking up the issue, saying, “Your continued efforts have renewed my faith in civic processes.”

Source: Office of Portland Ombudsman

Stacey Lynn