A&B Abstract:  An Act to Provide Relief to Survivors of Economic Abuse (the “Economic Abuse Law”), effective September 19, 2019, is aimed at preventing “economic abuse” by providing certain protections to victims of such abuse, in part, by imposing additional obligations on debt collectors and consumer reporting agencies (“CRAs”).  Debt collectors and CRAs should carefully review the Economic Abuse Law and determine whether updates to their policies, procedures and controls are necessary to ensure compliance with these additional protections.

What does the Economic Abuse Law do?

The Economic Abuse Law attempts to help victims of so-called “economic abuse” by (i) amending the Maine Fair Debt Collection Practices Act (“MFDCPA”) to provide certain protections from debt collection for 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 the result of economic abuse, and (iii) authorizing the courts to order compensation for losses resulting from economic abuse.

What is “economic abuse”?

Under the 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 abuse:

• unauthorized use of credit or property,
• withholding access to money or credit cards,
• forbidding attendance at school or employment,
• stealing from or defrauding of money or assets,
• exploiting the individual’s resources for personal gain of the defendant, or
• withholding physical resources such as food, clothing, necessary medications or shelter.

See 19-A M.R.S. § 4002(3-B).  The Economic Abuse Law’s legislative history clarifies that the definition of “economic abuse” “is not intended to address identity theft, which is covered by the federal Fair Credit Reporting Act . . . Instead, the amendment includes, but is not limited to, the exploitative use of joint credit accounts without authorization by both joint owners and debt incurred through coercion.”

What protections does the Economic Abuse Law provide?

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 any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor, the debt collector must cease collection of the debt or any disputed portion of the debt, until the debt collector obtains verification of the debt or a copy of the judgment, or the name and address of the original creditor, and a copy of the verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.  32 M.R.S. § 11014(2).

The Economic Abuse Law amends the MFDCPA to also require that a debt collector cease collection of a debt or any disputed portion of a debt owed by a consumer subjected to economic abuse, “[i]f the consumer provides documentation to the debt collector as set forth in [14 M.R.S. § 6001(6)] that the debt or any portion of the debt is the result of economic abuse.”  Under 14 M.R.S. § 6001(6), acceptable documentation includes (1) a statement signed by a Maine-based sexual assault counselor, an advocate, or a victim witness advocate, (2) a statement signed by a health care provider, mental health care provider or law enforcement officer, or (3) a copy of a (i) protection from abuse (or harassment) complaint or a temporary order or final order of protection, (ii) police report prepared in response to an investigation of an incident of domestic violence, sexual assault or stalking, or (iii) criminal complaint, indictment or conviction for a domestic violence, sexual assault or stalking charge.

Unlike the existing protections discussed above, this new provision could be read to impose an absolute bar to the collection of debt resulting from economic abuse, as it is unclear whether there could be circumstances under which a debt collector may resume collection of such debt.  For example, one piece of acceptable documentation that a victim may provide under 14 M.R.S. § 6001(6) is a “copy of a protection from abuse complaint or a temporary or final order of protection.”  To the extent that a debt collector relies on a complaint or temporary order of protection that a court ultimately dismisses, it is unclear whether, and if so how, a debt collector could resume collection of such debt.

Additional Protections Under the MFCRA 

The MFCRA requires that, if a consumer disputes any item of information contained in a consumer’s credit report on the grounds that it is inaccurate and the dispute is directly conveyed to the consumer reporting agency (“CRA”) by the consumer, the CRA must reinvestigate and record the current status of the information within 21 calendar days of notification of the dispute, unless the dispute is frivolous.  10 M.R.S. § 1310-H(2).

The Economic Abuse Law would provide additional protections for victims of economic abuse.  Specifically, if a consumer provides documentation to a CRA as set forth in 14 M.R.S. § 6001(6) that the debt or any portion of the debt is the result of economic abuse, the CRA must reinvestigate the debt and, if it is determined that the debt is the result of economic abuse, the CRA must remove from the consumer’s credit report any reference to the debt or any portion of the debt determined to be the result of economic abuse.  10 M.R.S. § 1310-H(2-A).

Compensation for Victims of Economic Abuse 

In addition to the foregoing, the Economic Abuse Law also amends Maine’s Protection from Abuse Chapter to expressly empower the courts to provide monetary compensation to victims of economic abuse.  Specifically, courts are expressly authorized to “enter a finding of economic abuse” and “[o]rder payment of monetary relief to the plaintiff for losses suffered as a result of the defendant’s conduct.”  See 19-A M.R.S. § 4007(1).  The legislative history clarifies that the [Economic Abuse Law] does not add economic abuse as a type of conduct for which a protection from abuse order may be sought, although it does provide that if a protection from abuse order is issued, the court has expanded discretion to order appropriate monetary relief to help address the impact of any economic abuse that may be found by the court.”

Takeaway

As Maine regulators gear up to implement and enforce the additional protections provided by the Economic Abuse Law, debt collectors and CRAs should carefully review and update their policies, procedures and controls to ensure compliance with these additional protections.

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