MAINE DEBT BUYER BILL SIGNED BY GOVERNOR

On Friday, June 16th, Gov. Paul LePage of Maine signed into law HP 836/LD 1199 as Public Law 216 of 2017 which adds new requirements to the Maine Fair Debt Collection Practices Act for debt buying companies looking to collect on the accounts of Maine residents. The Act applies to debts purchased or sold on or after January 1, 2018 and will not affect the validity of any collection actions taken, civil actions or arbitration actions commenced, or judgments entered into prior to January 1, 2018.


Prohibited Practices

The new law makes it a “prohibited practice” for a debt buyer to collect or attempt to collect a debt or sell or otherwise transfer ownership of a debt unless the debt buyer possesses the following [these requirements are consistent with the requirements contained in RMA’s Receivables Management Certification Program (see Appendix A, Standard # 18)]:

  • The original creditor’s name at the time of the charge-off;
  • The original creditor’s account number used to identify the debt at the time of the charge-off, if the original creditor used an account number to identify the debt at the time of charge-off;
  • The principal amount due at charge-off;
  • An itemization of interest and fees, if any, incurred after charge-off claimed to be owed and whether those were imposed by the original creditor or any subsequent owners of the debt;
  • If the debt is not from a revolving credit account, the date that the debt was incurred or the date of the last charge billed to the consumer’s account for goods or services received. In the case of debt from a revolving credit account, the debt buyer must possess the date of the last extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money;
  • The date and amount of the last payment, if applicable;
  • The names of all persons or entities that owned the debt after the time of the charge-off, if applicable, and the date of each sale or transfer;
  • Documentation establishing that the debt buyer is the owner of the specific debt at issue. If the debt was assigned more than once, the debt buyer must possess each assignment or other writing evidencing the transfer of ownership to establish an unbroken chain of ownership, beginning with the original creditor to the first debt buyer and each subsequent debt buyer; and
  • A copy of the contract, application or other documents evidencing the consumer’s liability for the debt. If a signed writing evidencing the original debt does not exist, the debt buyer must possess a copy of a document provided to the consumer before charge-off demonstrating that the debt was incurred by the consumer or, for a revolving credit account, the most recent monthly statement recording the extension of credit for the purchase of goods or services, for the lease of goods or as a loan of money.


Bringing a Collection Action

The information and documents described above must also be alleged and/or attached to the complaint and are subject to the Maine Rules of Evidence. The complaint must also include:

  • The basis for any interest and fees;
  • The basis for the request for attorney’s fees, if applicable; and
  • A statement that the cause of action is filed within the applicable statute of limitations period.


Criminal Background Checks

Debt buying companies who submit applications to be licensed as a debt collector must demonstrate that the company has conducted a criminal background check on officers and employees, prior to employment, if the person engages in the active collection of debt or has access to consumer credit information. This requirement is virtually identical to that currently required of RMA certified companies (see Appendix A, Standard # 3).

Business As Usual for RMA Certified Companies

This new law came about after intensive lobbying by RMA and its lobbyist to remove a number of harmful provisions from the bill as well as aligning the bill’s requirements with the RMA certification program. As a result, RMA does not expect this new law to result in any major compliance concerns for RMA certified debt buying companies but nonetheless plans to monitor the law’s implementation to identify any unintended consequences.

Among the provisions removed from the bill: (i) a prohibition on courts from issuing a garnishment order for the benefit of a debt buyer to enforce payment of a judgment; (ii) a prohibition on debt buyers from providing an affidavit as prima facie evidence; (iii) a prohibition on the sale of receivables; (iv) a requirement that all debt buying employees be licensed by the state; (v) the expungement of the debt for any violation of the act no matter how minor the violation; and (vi) the establishment of a Class C crime.

RMA would strongly recommend that its members share this member alert with any debt buyer, collection agency, and law firm it transacts business with as well as those internally responsible for compliance, purchase/sale, and legal operations.