June 28, 2017
On June 16, 2017, Maine Governor Paul LePage signed Public Law 2017, c. 216 (LD 1199), An Act to Promote Fiscal Responsibility in the Purchasing of Debt (the "Debt Buyers Law"), that amends the Maine Fair Debt Collection Practices Act (the "ME-FDCPA"). Under the Debt Buyers Law, a debt buyer may not collect or attempt to collect on a debt, or sell or otherwise transfer ownership of a debt, unless the debt buyer possesses:
In addition, a debt buyer may not sell or otherwise transfer ownership of a resolved debt, an interest in a resolved debt, or any financial information relating to a resolved debt. "Resolved debt" means a debt that has been paid, settled, or discharged in bankruptcy.
A "debt buyer" is a person that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether the person collects the debt or hires a third party (including an attorney) to collect the debt, but does not include a state or federally chartered bank or a person that acquires charged-off consumer debt incidental to the purchase of a portfolio predominantly consisting of debt that has not been charged off. A debt buyer is considered a debt collector for all purposes under ME-FDCPA, including the requirement to obtain a license from the Maine Bureau of Consumer Credit Protection (the "BCCP"). "Charge-off" means the act of a creditor removing an account from its books as an asset and treating it as a loss or expense because payment is unlikely.
A debt buyer may not initiate a collection action against a consumer unless the debt buyer alleges all of the following in the complaint:
The debt buyer must also attach to the complaint: (1) a copy of the contract, application, or other document evidencing the consumer's agreement to the debt, and (2) a copy of the bill of sale or other writing establishing that the debt buyer is the owner of the debt (including a document evidencing each assignment or transfer of ownership in order to establish an unbroken chain of ownership from the original creditor to the debt buyer). The Debt Buyers Law imposes strict evidentiary standards that must be met by the debt buyer in order to obtain a judgment against a consumer, even if the consumer does not appear in the court proceeding.
The Debt Buyers Law also requires each licensed debt buyer to provide documentation that the debt buyer has conducted a criminal background check prior to employment on every officer or employee of the debt buyer who engages in the active collection of debt for the debt buyer or has access to consumer credit information.
Failure to comply with the Debt Buyers Law subjects the debt buyer to liability for actual damages, additional damages as determined by the court of $2,000 or less, potential class actions, and reasonable attorney's fees and court costs. In addition, the Debt Buyers Law authorizes the BCCP (via the Maine attorney general) to impose civil penalties of $10,000 or less for willful violations of ME-FDCPA.
The Debt Buyers Law applies to all debt sold to a debt buyer 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.