Mass. COVID-19 Debt Collection Ban Struck Down

By Chris Villani
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Law360 (May 6, 2020, 6:31 PM EDT) -- An emergency regulation from the Massachusetts attorney general banning certain debt collection calls and lawsuits was blocked Wednesday by a federal judge, who said the measure violates the First Amendment rights of collection agencies without adding meaningful protections for consumers.

Granting trade group ACA International Inc.'s request for a temporary restraining order, U.S. District Judge Richard G. Stearns ruled that Attorney General Maura Healey already has robust debt collection safeguards on the books and the only thing the emergency regulation does is single out certain types of debt collection and violate commercial free speech.

"While I laud the Attorney General's desire to protect citizens of Massachusetts during a time of financial and emotional stress created by the Covid-19 pandemic, I do not believe that the regulation adds anything to their protections that the existing comprehensive scheme of law and regulation already affords to debtors," Judge Stearns wrote, "other than an unconstitutional ban on one form of communication."

In addition to banning telephone calls by certain debt collectors, the regulation also made it a violation of the state consumer protection statute, Chapter 93A, for those same collectors to bring a lawsuit. ACA argued that banning debt collection lawsuits runs afoul of federal law.

Judge Stearns agreed, finding that the scales tipped in favor of ACA members who reported revenue drops of 20% to 50% in Massachusetts.

"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," the judge wrote.

Banning some forms of debt collection may harm some of the most important essential businesses operating during the pandemic, the judge said.

"Of perhaps greater concern is the impact the regulation may have on hospitals and utilities who depend on collection agencies to remain solvent," Judge Stearns wrote, adding 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."

Healey had argued the measure was only temporary and would expire either June 24 or at the end of the current state of emergency. She likened it to the state's Supreme Judicial Court tolling the state statute of limitations: an extraordinary measure for an extraordinary time.

Judge Stearns noted during oral arguments last week that constitutional rights don't "take a vacation" even when the state has more power to define and protect its own interests in a time of crisis. And on Wednesday, he expressed doubt the regulation would do much good. He pointed out that anyone looking to collect mortgage debts, tenant debts, or debts for telephone, gas, or electric utility companies could still file lawsuits and debt collectors could still call debtors under certain circumstances.

And, he wrote, "while the regulation promises some relief from unwanted telephone calls, it does not pretend to offer any relief from the debt itself or the obligation to repay it in full."

As it is, debt collectors were already limited to a maximum of two calls per week under existing state regulations.

"The best that can be said for the regulation is that it decreases incrementally the number of times that a phone might ring in a debtor's home with a wanted or unwanted call from one species of debt collector," Judge Stearns wrote. "Although in this day and age of cell phones and caller ID the option of simply not answering the phone or placing it in silent mode is a viable alternative for consumers."

ACA sued in April, claiming the regulation violated the principles of free speech and threatened to put some of its members out of business.

"We're pleased with the outcome of this case and believe today's decision to protect two-way communications will minimize uncertainty and empower consumers," ACA CEO Mark Neeb said in a statement. "Our members' focus will continue to be delivering timely financial information to individuals to help them weather this crisis and find a solution that meets the needs of all parties involved."

A representative for Healey said her office is reviewing the decision.

ACA is represented by David M. Bizar and Robert J. Carty Jr. of Seyfarth Shaw LLP.

Healey is represented by Eric A. Haskell and Jennifer E. Greaney of the state attorney general's office.

The case is ACA International v. Healey, case number 1:20-cv-10767, in the U.S. District Court for the District of Massachusetts.

--Editing by Michael Watanabe.

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Case Information

Case Title

ACA International v. Maura Healey

Case Number




Nature of Suit

Constitutional - State Statute


Richard G. Stearns

Date Filed

April 20, 2020

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