Maine enacts law to protect victims of economic abuse | Alston & Bird
A&B Summary: The Act to Provide Relief to Survivors of Economic Abuse (the “Economic Abuse Act”), which came into effect on September 19, 2019, aims to prevent “economic abuse” by providing certain protections to victims of such abuses , in part, by imposing obligations on them to debt collectors and consumer reporting agencies (“CRAs”). Debt collectors and rating agencies should carefully review economic abuse law and determine whether updates to their policies, procedures and controls are necessary to ensure compliance with these additional protections.
What is the economic abuse law for?
The Economic Abuse Act attempts to help victims of so-called “economic abuse” by (i) amending the Maine Fair Debt Collection Practices Act (“MFDCPA”) to provide certain protections against collection claims to survivors of economic abuse, (ii) amending the Maine Fair Credit Reporting Act (“MFCRA”) to require credit reporting agencies to remove from a consumer’s credit report any debt that is determined to be being the result of economic abuse, and (iii) allowing courts to order compensation for losses resulting from economic abuse.
What is “economic abuse”?
Under Economic Abuse Law, “economic abuse” means causing or attempting to cause an individual to be financially dependent by maintaining control over the individual’s financial resources. The definition also includes the following non-exhaustive list of certain types of economic exploitation:
- unauthorized use of credit or property,
- deny access to money or credit cards,
- prohibition from attending school or employment,
- theft or fraud of money or property,
- exploiting the resources of the individual for the personal gain of the defendant, or
- withhold physical resources such as food, clothing, necessary medication or shelter.
To see 19-A MRS § 4002 (3-B). The legislative history of Economic Abuse Law states that the definition of “economic abuse” “is not intended to combat identity theft, which is covered by the federal Fair Credit Reporting Act. . . Instead, the amendment includes, but is not limited to, the misuse of joint credit accounts without the permission of the co-owners and coerced debts. “
What protections does the economic abuse law offer?
Additional protections under the MFDCPA
Under the existing provisions of the MFDCPA, if a consumer notifies a debt collector in writing within 30 days of receiving a debt validation notice that the debt, or part of the debt, is disputed or the consumer asks for the name and address of the original creditor, the debt collector must stop collecting the debt or any disputed part of the debt, until the debt collector obtains the debt verification or a a copy of the judgment, or the name and address of the original creditor, and a copy of the audit or judgment, or the name and address of the original creditor, is mailed to the consumer by the collection agent. 32 MRS § 11014 (2).
The Economic Abuse Act amends the MFDCPA to also require a debt collector to cease collection of a debt or any disputed part of a debt owed by a consumer subjected to economic abuse, “[i]f the consumer provides the documentation to the debt collector as indicated in [14 M.R.S. § 6001(6)] that the debt or part of the debt is the result of economic abuse. Under Section 14 MRS § 6001 (6), acceptable documents include (1) a statement signed by a Maine-based sexual assault counselor, attorney or victim witness attorney, (2) a statement signed by a health care provider, caregiver or law enforcement officer, or (3) a copy of an (i) abuse (or harassment) protection complaint or temporary or final order to protection, (ii) a police report prepared in response to an investigation into an incident of domestic violence, sexual assault or criminal harassment, or (iii) a criminal complaint, indictment or conviction for a charge domestic violence, sexual assault or criminal harassment.
Unlike the existing protections discussed above, this new provision could be interpreted as imposing an absolute bar to the collection of debts resulting from economic abuse, as it is not clear whether there might be circumstances in which a debtor. collection may resume collection of such a debt. For example, an acceptable document that a victim can provide under Section 14 MRS § 6001 (6) is a “copy of an abuse protection complaint or temporary or final protection order”. To the extent that a debt collector relies on a complaint or temporary protection order that a court ultimately rejects, it is not clear whether, and if so how, a debt collector might resume collection of that. debt.
Additional protections under the MFCRA
The MFCRA requires that, if a consumer disputes a piece of information contained in a consumer’s credit report on the grounds that it is inaccurate and the dispute is referred directly to the consumer information agency (” CRA ”) by the consumer, the CRA must review and record the current status of information within 21 calendar days of notification of the dispute, unless the dispute is frivolous. 10 MRS § 1310-H (2).
The Economic Abuse Law would provide additional protections to victims of economic abuse. Specifically, if a consumer provides documents to an ARC as stated in 14 MRS § 6001 (6) that the debt or part of the debt is the result of economic abuse, the CRA must reconsider the debt and, s ‘It is determined that the debt is the economic operating result, the CRA shall remove from the consumer’s credit report any reference to the debt or any part of the debt determined to be the economic operating result. 10 MRS § 1310-H (2-A).
Compensation for victims of economic abuse
In addition to the above, the Economic Abuse Act also amends the Maine Abuse Protection Chapter to expressly allow courts to provide monetary compensation to victims of economic abuse. More specifically, the courts are expressly authorized to “enter a finding of economic abuse” and “[o]order the payment of monetary compensation to the plaintiff for losses suffered as a result of the defendant’s conduct. To see 19-A MRS § 4007 (1). The legislative history specifies that the [Economic Abuse Law] does not add economic exploitation as a type of conduct for which an abuse protection order can be sought, although it does provide that if an abuse protection order is issued, the court has discretion increased to order appropriate monetary compensation to help mitigate the impact of any economic abuse that may be found by the court.
To take with
As Maine regulators prepare to implement and enforce the additional protections provided by the Economic Abuse Act, debt collectors and rating agencies should carefully review and update their policies, procedures and controls to ensure that these additional protections are respected.