Massachusetts Attorney General Issues Unprecedented Regulation Limiting Consumer Debt Collection During the COVID-19 State of Emergency

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On Friday, March 27, 2020, Massachusetts Attorney General Maura Healey promulgated an unprecedented regulation severely restricting and limiting the collection of debts from Massachusetts consumers during the COVID-19 state of emergency.[1]  The “COVID-19 Emergency Debt Collection Regulation” (“Emergency Regulation”) supplements the Attorney General’s Debt Collection regulations at 940 C.M.R. 7.00, is effective on March 30, 2020, and will be published at 940 C.M.R. 35.00.

It is divided into two substantive sections:  its first section applies to all creditors (including “debt collectors” as defined in the Emergency Regulation to be consistent with the Massachusetts Debt Collection Act).[2]  Its second section applies only to “debt collectors”.[3]

In summary, for a 90-day period following its immediate effective date or until the COVID-19 State of Emergency expires (whichever occurs first), the Emergency Regulation deems it an “unfair or deceptive act or practice,” under the Massachusetts Consumer Protection Act,[4] for any creditor to:

• Initiate, file or threaten to file any new debt collection lawsuit;
• Initiate, threaten to initiate or act upon any legal or equitable remedy to garnish, seize, attach or withhold wages, earnings, property or funds for payment of a debt to a creditor;
• Initiate, threaten to initiate or act upon any legal or equitable remedy to repossess any vehicle;
• Apply for, serve, enforce or threaten to apply for, serve or enforce any capias warrant;
• Visit or threaten to visit the household of any debtor at any time;
• Visit or threaten to visit the employment location of any debtor at any time; and
• Confront or communicate in person with a debtor the collection of a debt in a public place at any time.[5]

The Emergency Regulation contains two enumerated exceptions:  foreclosures of real property mortgage loans, and real property owner-tenant debts.[6]  In addition, telephone, electric and gas companies regulated by the Massachusetts Department of Public Utilities are exempted from complying with the bar on visiting the household of any consumer during the COVID-19 state of emergency.[7]

For the same 90-day period or until the COVID-19 State of Emergency expires (whichever occurs first), the Emergency Regulation deems it an “unfair or deceptive act or practice,” under the Massachusetts Consumer Protection Act, for any debt collectors to:

• Initiate a communication with a debtor by telephone, either in person or by a recorded audio message, to the debtor’s residence, cellular telephone or other designated personal telephone number, provided such a communication shall not be prohibited if it is in response to a request made by the debtor.[8]

This prohibition does not apply, however, to telephone communications initiated by debt collectors solely to inform a debtor of a rescheduled court appearance date or to discuss mutually agreeing to postpone a scheduled court appearance.[9]  This prohibition also does not apply to bar telephone communications by debt collectors with regard to foreclosure actions by mortgagees of real property loans, and real property owners attempting to collect debts of their tenants.[10]

By the Emergency Regulation’s deeming of any prohibited actions or conduct to constitute an “unfair or deceptive act or practice” under the Massachusetts Consumer Protection Act, the Massachusetts Attorney General is authorized to bring enforcement actions, and consumers can bring private lawsuits for violations.  The Massachusetts Attorney General’s enforcement powers include the ability to sue for actual damages, statutory penalty damages up to $5,000 per violation, attorney’s fees and injunctive relief.[11]  Private litigants can obtain actual damages, up to treble damages for willful or knowing violations, and attorney’s fees and costs, and class action and injunctive relief are potentially available.[12]

Our Firm’s Consumer Financial Services Litigation practice group has extensive experience with the Massachusetts consumer debt collection regulations and Consumer Protection Act. 

 

[1] Unfair and Deceptive Debt Collection Practices During the State of Emergency Caused By COVID-19, 940 C.M.R. 35.00.

[2] 940 C.M.R. 35.03.

[3] 940 C.M.R. 35.04.

[4] The “Massachusetts Consumer Protection Act” is short-form title for the “Regulation of Business Practices for Consumers Protection,” M.G.L. c. 93A, § 2.

[5] 940 C.M.R. 35.03(1)(a)-(g).

[6] 940 C.M.R. 35.03(2).

[7] 940 C.M.R. 35.03(3).

[8] 940 C.M.R. 35.04(1).

[9] 940 C.M.R. 35.04(2).

[10] 940 C.M.R. 35.04(3).

[11] MG.L. c. 93A, § 4.

[12] M.G.L. c. 93A, § 9.