Editor's Note: For all related insideARM articles and other information, please check insideARM's COVID-19 Impact resources page.
Updated to clarify prohibition is for telephone calls.
Massachusetts' Attorney (AG) General seeks emergency measures amid the COVID-19 crisis, including a ban on outbound collection calls and legal enforcement of unpaid debt. The AG also joins a coalition of other state attorneys general to implore ED to take stronger measures to protect student loan borrowers.
New Mass. Emergency Debt Collection Rules
Today, the AG filed with the Mass. Secretary of State a new set of rules that outline unfair and deceptive practices during the COVID-19 emergency. The notice of the adoption of these emergency rules states:
Under the present circumstances, certain practices by creditors and debt collectors are unfair and deceptive and violate the Massachusetts Consumer Protection Act.
The new rule covers a period until 90 days after the adoption of the regulation or until the expiration of the state of emergency, whichever occurs first.
Prohibitions on Legal Enforcement of Debt
Under the new rule, it is an unfair or deceptive act or practice for any creditor or debt collector to seek legal remedies for debt, such as initiating, filing, or threatening to file any new collection lawsuit or seek an equitable remedy (such as garnishment, seizures, or repossessions). There are certain exceptions, such as actions for loans secured by mortgages on real property or, in some circumstances, for a utility regulated by the Dep't. of Public Utilities or Dep't. of Telecommunications and Cable.
Prohibition on Outbound Collection Calls
The new rule also includes a sweeping prohibition on outbound debt collection calls. The rule states that it applies "only to debt collectors." However, the definition of "debt collector" under this rule includes debt buyers. It is unclear whether agencies who do first-party work fall under this category.
According to the rule:
[I]t shall be an unfair or deceptive act or practice for any debt collector to initiate a communication with any debtor via telephone, either in person or by recorded audio message to the debtor's residence, cellular telephone, or other telephone number provided by the debtor as his or her personal telephone number, provided that a debt collector shall not be deemed to have initiated a communication with a debtor if the communication by the debt collector is in response to a request made by the debtor for said communication.
The rule does not contain a prohibition on answering inbound calls.
Exceptions to the outbound call prohibition include informing a consumer of a rescheduled court appearance and for debts secured by a mortgage on real property.
Imploring ED to Expand Protections for Student Loan Borrowers
In addition to filing these new rules, the Attorney General joined 26 other state attorneys general to implore the U.S. Department of Education (ED) to take stronger measures to protect federal student loan borrowers during this time.
Earlier this week, ED announced that it will suspend legally enforcing debts through seizures such as wage and tax return garnishments. The attorneys general are asking ED Secretary DeVos to halt involuntary collection efforts on all federal student loans. ED's prior guidance extended to loans held by the department, but the AGs request that it extend to Federal Family Education Loans and Perkins Loans as well.
The AGs also request that ED automatically enrolling student borrowers who request a forbearance or become delinquent in their loans into the Income Driven Repayment plan for $0/month payments without needing to apply for such.
The regulations are clearly a well-intentioned effort on the part of the Attorney General to provide relief to those who need it. Unfortunately, they still represent a prior restraint on speech that is not content-neutral. They also restrict access to the courts, a constitutionally protected right. Most troublingly, they impose these restrictions across the board, without regard to whether the consumer has suffered an adverse economic impact as a result of the current emergency.
I respect and appreciate the need to protect those who have been devastated by the shut-down. I do not understand why those victims of COVID-19 are being placed on an equal footing with those who have remained fully employed at businesses that have remained fully operational.