Judge’s decision about emergency regulation in Massachusetts in ACA International v. Healey suggests overreach in proposed legislation elsewhere. Editor’s note: This article is available for members only.
6/1/2020 11:30
The order in ACA International v. Healey granting ACA’s motion for a temporary restraining order and preliminary injunction may have restored agencies’ ability to call consumers in Massachusetts, but will the decision be useful in pushing back against other statutory and regulatory restraints on debt collection during the COVID-19 public health emergency and in its aftermath?
On May 6, Judge Richard G. Stearns of the U.S. District Court for the District of Massachusetts issued a memorandum opinion and order in ACA International v. Healey granting ACA’s motion for a temporary restraining order and preliminary injunction and enjoining enforcement of Massachusetts Attorney General Maura T. Healey’s emergency regulation, 940 CMR 35.00 , which had halted almost all debt collection activities in the state, including agencies’ unsolicited calls to consumer debtors. That regulation had been in effect since March 26, 2020.
Since the issuance of the court’s memorandum opinion, ACA has used messaging from the court’s opinion in its legislative and regulatory advocacy efforts.
The opinion issued in the Massachusetts case drives home the fact that federal and state laws already protect consumers through requirements on call frequency and timing as well as communication methods, and debt collectors already have policies in place to comply with these laws, so there’s no need for regulators to reinvent the wheel.
Yet legislation and regulations, including some proposed and issued since the onset of the COVID-19 pandemic, continue to include restrictions on debt collection at the risk of limiting already lawful communication with consumers and harming agencies in the accounts receivable management (ARM) industry. These agencies, which include many small businesses, help support the credit-based economy and ensure that consumers have opportunities to resolve their debts and have access to financial planning tools for the future.
For example, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act was passed in the House May 15 with troubling provisions for the ARM industry.
Among ACA’s concerns in the HEROES Act, the bill multiplies damages for Fair Debt Collection Practices Act violations under the proposal by 10 times. It also adds creditors to the definition of a debt collector, adding new restrictions to many entities not previously covered by the FDCPA and creates unworkable and overly restrictive payment plans. ACA provided analysis of the legislation here.
Notably, Stearns found many of the same concepts in HEROES Act to be problematic when he issued his decision in May.
Stearns observed in his ACA International v. Healey opinion that, “Given the plethora of protection provided to debtors by the laws and regulations the court has previously cited, the interest a debtor may have in the Regulation may not weigh as heavily as the threat of extinction faced by smaller collection agencies who have been effectively put out of business. Of perhaps greater concern is the impact the Regulation may have on hospitals and utilities who depend on collection agencies to remain solvent. Finally, the court recognizes the argument advanced by ACA that a capitalist society has a vested interest in the efficient functioning of the credit market which depends in no small degree on the ability to collect debts.”
While the HEROES Act notably does not include an outright ban on collections or impact the ability to make phone calls, ACA is continuing to advocate to ensure the problematic provisions are removed or modified in the U.S. Senate.
Other legislation proposed in 116th Congress includes broad communication restrictions for the ARM industry.
U.S. Sen. Sherrod Brown, D-Ohio, and U.S. Rep. Maxine Waters, D-Calif., issued proposals that would limit the ability to communicate with consumers to only in writing, among several other problematic ideas.
In the District of Columbia, the City Council passed the COVID-19 Response Supplemental Emergency Act , which among other requirements restricted debt collection communications.
ACA continues to advocate that it is important that any policies proposed or enacted in response to COVID-19 provide consumers with more options that will allow them to continue to access credit and services and put financial decisions into their hands, which comes through communication. This is critical due to the uncertainty about the length and severity of the economic impact related to COVID-19. During this critical time, ACA members remain committed to assisting consumers and have training and hardship programs in place to help consumers make arrangements that best suit their unique financial situation, including implementing temporary suspension of collections for consumers directly impacted by the coronavirus.
Read more analysis of the ACA International v. Healey decision from ACA’s Corporate Counsel Colin Winkler here.
For members interested in learning more about advocacy and action on Capitol Hill in the coming months, register for the Washington Insights Livestream set for June 3.
For more information on how the ACA Licensing staff can assist with your licensing needs, please contact us at [email protected] or call (952) 926-6547.