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Washington governor issues temporary moratorium on garnishments and accruals of interest
On April 14, Washington Governor Jay Inslee issued an executive order temporarily prohibiting certain garnishments and accruals of interest statewide. Governor Inslee noted that garnishments and other collect judgments could hinder consumers from paying for basic necessities, thereby, endangering the lives of individual consumers and risking further negative impacts on public health. Inslee’s statewide order is in place through May 14.
New York Department of Financial Services issues FAQs for emergency insurance regulations
New York’s Department of Financial Services has published FAQs for the property/casualty emergency regulation adopted on March 30. The FAQs address which policyholders are eligible for the 60-day moratorium on policy cancellation or non-renewal and other concerns pertaining to implementation of the moratorium.
Maine Supreme Court revises court guidelines amid Covid-19 crisis
On April 14, Maine Supreme Court Acting Chief Justice Andrew Meade issued a revised emergency order providing court guidelines for navigating the Covid-19 crisis. The guidelines pertained to the types of cases the courts will schedule and hear; exceptions and motion-filing procedures; postponement of jury trials and grand jury proceedings; boards, committees, and continuing legal education; and hearing of oral arguments. The revised order supersedes the initial order issued from March 30, and is effective until May 1, unless otherwise changed, revised, or lifted.
Virginia requires licensure of debt settlement service providers
On April 7, the Virginia governor signed HB 1553, which outlines licensing and regulatory requirements for debt settlement services providers. Among other things, HB 1553 specifies that all debt settlement services providers must be licensed by the state, must file a bond with the state commissioner, and must comply with outlined record retention, reporting, and examination requirements. HB 1553 also outlines prohibited conduct, including prohibiting licensees from accepting a fee from a consumer prior to providing the requested debt settlement service, or from using false, misleading, or deceptive advertisements in connection with the offered services. HB 1553 also provides for cease and desist orders and civil penalties to be issued against licensees that violate these requirements, grants consumers a private right of action against licensees, and makes a violation a prohibited practice under the Virginia Consumer Protection Act. Additionally, the State Corporation Commission is directed to “establish a procedure, to be in effect by March 1, 2021, for any person to apply, prior to July 1, 2021, for a license” that will take effect when HB 1553’s requirements become effective on July 1, 2021.
2nd Circuit: Interest disclosure in collection letter did not violate FDCPA
On April 9, the U.S. Court of Appeals for the Second Circuit affirmed a district court’s dismissal of an FDCPA action, holding that a debt collection letter that stated interest, late charges, and other charges “may” vary from day to day is not deceptive or misleading. According to the opinion, the plaintiff co-signed a student loan that fell into default and was charged-off. The creditor purchased the debt and placed the account with a collection agency (collectively, defendants), and a letter was sent to the plaintiff that included a “‘time sensitive’ offer” to pay a slightly reduced amount, as well as the following language: “Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater.” The plaintiff filed a class action complaint against the defendants, claiming the letter violated the FDCPA because it suggested that late fees and other charges could accrue, even though “such charges are not legally or contractually available.” After the defendants filed a motion to dismiss, the plaintiff filed an amended complaint adding more allegations. However, the amended complaint was marked as “deficient,” and because the 21-day window had closed, the plaintiff was required to request leave from either the defendants or the district court to re-file. The defendants did not consent to re-filing, and the district court denied the plaintiff’s motion for leave and granted the defendants’ motion to dismiss.
On appeal, the 2nd Circuit first examined whether the plaintiff had timely filed her amended complaint. In concluding that the amended complaint was timely filed (notwithstanding the deficiency notice), the appellate court stated that “when a plaintiff properly amends her complaint after a defendant has filed a motion to dismiss that is still pending, the district court has the option of either denying the pending motion as moot or evaluating the motion in light of the facts alleged in the amended complaint.” However, the appellate court nevertheless concluded that the district court properly dismissed the plaintiff’s amended complaint on the merits because she failed to sufficiently state a plausible claim for relief. Furthermore, because the initial letter said that interest and late charges “may” be applied to the balance, the appellate court concluded that the letter was not inaccurate and therefore not deceptive or misleading under the FDCPA even though the debt collector had not previously charged interest and did not intend to do so in the future. Moreover, acknowledging that interest may accrue is not “threatening” language under the FDCPA, the appellate court wrote.
Wisconsin DFI issues emergency guidance on debt collection
On April 13, the Wisconsin Department of Financial Institutions issued guidance on debt collection practices that are prohibited during the Covid-19 crisis. Among them are repeated telephone calls and unsolicited threats to sue. The guidance warns that debt collectors that fail to respect hardships arising from the Covid-19 pandemic “should expect to be judged harshly.”
California insurance commissioner issues bulletin requiring premium refunds, credits, and reductions
On April 13, the California insurance commissioner issued Bulletin 2020-3 to property and casualty insurers regarding premium refunds, credits, and reductions in response to Covid-19. In light of the reductions in risk across certain lines of insurance as a result of reduced activity during Covid-19, insurers are required to make an initial premium refund for the months of March and April to all adversely impacted California policyholders for certain lines of insurance as soon as practicable but within 120 days from April 13. The bulletin contains additional guidance regarding how to refund the premiums, whether approval is required from the Department of Insurance for certain changes in premiums, and reporting requirements for actions taken.
Massachusetts attorney general: CARES Act payments are exempt from seizure
On April 13, the Massachusetts Office of the Attorney General notified creditors and debt collectors that, in its view, stimulus payments made under the CARES Act are exempt from garnishment or attachment by creditors under Massachusetts law, and remain exempt regardless of how the funds are deposited or held after receipt. Any act, or threat to act, to garnish, attach, or otherwise seize the funds will be a violation of the attorney general’s regulations governing debt collection.
Pennsylvania Insurance Department issues guidance for insurance companies
On April 13, the Pennsylvania Insurance Department issued Notice #2020-10 addressing obligations of domestic insurance companies during the Covid-19 pandemic. The notice details (i) extensions of 30 or 60 days for various regulatory filing deadlines; (ii) waivers of the hard copy, original signature, notarization and other in-person related filing requirements; and (iii) adjustments for remote examinations.
Pennsylvania Insurance Department encourages premium finance companies to offer grace periods
On April 13, the Pennsylvania Insurance Department issued Notice #2020-11 communicating its expectations for premium finance companies during the Covid-19 pandemic. Such companies, and the insurance carriers they work with, are encouraged to extend grace periods for loan payments, be flexible with regard to determinations of default, and waive delinquency or other late payment charges.