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Collections: Calling Borrowers Too Much – MA Regulations Trip Up Some in Industry

By Ben Guimarra

Nobody wants to think about this: but some borrowers will need to be “reminded” to make their payment. Shocking, I know!

But some companies are getting themselves into trouble for how exactly they go about this. And Massachusetts is a good example of a state that’s actively looking to curb what it views as overly aggressive debt collection practices.  Look, for example, at Ditech Financial, which paid a $1.4 million fine when it was sued by the Attorney General over its attempt to collect on 5,000 delinquent loans, sometimes calling borrowers 12 times a day.

So let’s go through some key points.

What rules apply to me?

In Massachusetts, there are two sets of Debt Collection requirements.

First, there are requirements put in place by the Division of Banks that apply only to “debt collection agencies.” 209 CMR 18.00 For most people reading this, don’t get distracted by these requirements—they don’t apply to “creditors” and are really more for true debt collection agencies.

Secondly, there are Attorney General regulations. 940 CMR 7.00 These will apply to most people reading this, as they apply to “creditors” and are not limited to 3rd party debt collectors.

Attorney General Debt  Collection Rules:

General Overview

So these are some—but not all—of the requirements/prohibitions in the AG regulations.

  • Cannot threaten to sell the debt to a third party that “won’t be so patient”
  • Cannot imply that non-payment of the debt will result in arrest
  • Using profanity is prohibited
  • Employee calling the debtor must identify himself by full name and/or first name with a personal identifier (that cannot be shared with other employees)
  • Cannot call outside of “normal waking hours,” which are, unless the institution should know otherwise, can be assumed to be from 8:00 a.m. to 9:00 p.m.
  • Cannot confront the debtor about the debt publicly (so using Twitter to”shame” someone is a No-Go)
  • Excessive communication (not including borrower-prompted) is also prohibited

Zoom in – Excessive Communication  (aka nagging?)

Let’s zoom in on the last requirement list above—which is regarding how often you can contact the consumer. I’m zooming in on this because it runs contrary to other state and federal regulations and represents a more conservative stance that could easily be overlooked, especially by a company operating across numerous states.

The AG regulations limit how often a company can “initiate a communication” with a consumer, including via telephone, in-person, text messaging, or audio recording. But Note: There is no limit on communications requested by the consumer, i.e., calling the consumer back doesn’t count towards the limits below.

There are two limitations here:

  • Cannot contact the consumer at their residence, mobile phone, or other personal telephone number more than twice in any seven-day period.
  • Cannot contact the consumer through any other means more than twice in any 30-day period.
  1. With the basics out of the way – the important thing to understand is how Massachusetts defines “initiate a communication.” Per Attorney General Guidance, unsuccessful attempts by a creditor to reach a debtor via telephone may not constitute initiation of communication if the creditor is truly unable to reach the debtor or to leave a message for the debtor.

So, if you attempt to contact a consumer but the consumer doesn’t answer the phone—that does not count as one of your two permissible attempts to contact—BUT ONLY if there was no way to leave a message. So this would ONLY be permissible if the voicemail box was full or off. This is a tougher stance than other regulations that you’ll come across—which is why I focus in on it.

Of course, the AG guidance later goes on to say that, nonetheless, the AG still prohibits other communication if shown that the “natural consequence of which is to harass, oppress, or abuse the debtor.” For example, if you call a consumer but the voicemail box is full—but then you call 200 times a week. Even though you can exceed the strict “two per week” limit, this would still be unlawful as considered an attempt to harass or abuse the consumer.

Well there you go, happy collecting!


Ben Guimarra

Ben Guimarra, Esq., is a director at Spillane Consulting Associates, Inc. He can be reached at BenGuimarra@SCAPartnering.comThis article was originally published at SCAPartnering.com and has been reprinted with minor edits and with the author’s permission.

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