Earlier this week, InsideArm identified a subtle change to the Massachusetts Attorney General’s website that may reflect an unannounced change in the regulations governing third-party collection agencies in Massachusetts. The Massachusetts Attorney General’s website now indicates the following:
The Attorney General has issued debt collection regulations that establish standards by defining unfair and deceptive acts and practices for the collection of debt from Massachusetts consumers. The regulations apply to original creditors (including their attorneys), third-party debt collection agencies, and buyers of delinquent debt who hire third parties, including attorneys, to collect debt on their behalf.
Previously, Massachusetts split the regulation of debt collection practices with the Massachusetts Division of Banks (DOB) regulating third-party debt collection agencies while the Massachusetts Attorney General’s Office regulated creditors. Indeed, in a January 2007 press release, the Attorney General stated that “[t]he Massachusetts Attorney General’s Debt Collection Regulations prohibit many unfair debt collection practices by creditors, 940 C.M.R. 7.00 and regulations of the Massachusetts Division of Banks prohibit unfair debt collection practices by debt collection agencies, 209 C.M.R. 18.00.”
This division of labor created uncertainty about how regulations are enforced in Massachusetts, especially with respect to passive debt buyers. Currently, the definition of creditor includes “a buyer of delinquent debt who hires a third party or an attorney to collect such debt.”
According to InsideArm’s reporting, “as recently as September 22, 2016, the Attorney General’s office and the DOB maintained that regulation of third-party debt collectors was the responsibility of the DOB, not the Attorney General.” Despite this previous assurance, the Attorney General at some point updated its website to indicate third-party debt collectors may now be regulated by the Attorney General.
Collection agencies should review this subtle change because the Attorney General’s rules vary from the DOB rules and these differences may impact a collector’s conduct in Massachusetts.