ACA International, the Association of Credit and Collection Professionals, has filed a lawsuit in Massachusetts seeking to have the federal district court declare the emergency debt collection regulation promulgated on March 26 by the MA Attorney General invalid and enjoining the AG from enforcing the regulation against debt collectors and creditors.  In addition to filing a Complaint for Declaratory and Injunctive Relief, ACA has filed an Emergency Motion for a Temporary Restraining Order and Preliminary Injunction.

The emergency regulation, entitled “Unfair and Deceptive Debt Collection Practices During the State of Emergency Caused by COVID-19” (940 CMR 35:00), applies to creditors and debt collectors.  The regulation makes it an unfair or deceptive act or practice for creditors and debt collectors to engage in various types of activities, including initiating, filing, or threatening to file a new collection lawsuit or initiating, threatening to initiate or acting upon any legal or equitable remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property, or funds for the payment of debt to a creditor.  It also prohibits debt collectors (which includes first-party service providers collecting on behalf of creditors in the creditor’s name) from initiating telephone calls to the debtor’s residence, cellular phone, or other telephone number provided as a personal number.

In its complaint, ACA alleges that the emergency regulation is invalid for the following reasons:

  • It is a content-based restriction on speech that violates the First Amendment of the U.S. Constitution.
  • It restricts the right of debt collectors and creditors to “petition the Government for a redress of grievances” by restricting access to the courts in violation of the First Amendment of the U.S. Constitution.
  • It violates the Massachusetts anti-SLAPP statute which protects parties from actions designed to chill petitioning activity (which actions would presumably flow from any violation of the provision of the regulation restricting court access).
  • It violates the due process clause of the Fourteenth Amendment to the U.S. Constitution because it was issued without notice and comment and exposes ACA members to the potential for liability and sanctions.
  • It violates the Equal Protection Clause of the U.S. Constitution and Article 10 of the Massachusetts Constitution by (1) exempting certain creditors and debt collectors from its prohibitions, thereby arbitrarily discriminating against those creditors and debt collectors who are subject to the regulation’s prohibitions and depriving such creditors and debt collectors of the equal protection of the laws, and (2) making an absolute and arbitrary selection of a class, independently of good reasons for making a distinction.
  • It violates the separation of powers clause in the Massachusetts Constitution by impermissibly interfering with judicial functions.
  • It exceeds the MA AG’s authority to issue regulations.

In its emergency motion, in addition to arguing that it is likely to succeed on the merits of its various claims regarding the regulation’s invalidity, ACA argues that its members will suffer irreparable harm absent injunctive relief because not only does the loss of First Amendment rights constitute irreparable harm, the regulation is inflicting permanent financial harm on ACA members through the loss of revenue and forced employee layoffs.  ACA also argues that: (1) the harm to its members outweighs any harm to the AG because an injunction will not harm the AG and if enjoined, the AG will still have a vast array of enforcement tools; and (2) injunctive relief will serve the public interest because it will advance the free flow of helpful and truthful information among creditors, debt collectors, and consumers, and will aid consumers who wish to pay their debts and would benefit from hardship programs that can eliminate the need for litigation over unpaid bills.