Massachusetts Court Rules in Favor of Passive Debt Buyers

SACRAMENTO, Calif. -- The Massachusetts Supreme Judicial Court handed down a ruling earlier this week holding that passive debt buyers are not required to obtain a Massachusetts license when “all aspects of the debt collection process are contracted out to and conducted by” a licensed third-party collection agency.

The decision in Dorrian v. LVNV Funding, LLC reversed a lower court ruling finding that an unlicensed passive debt buyer had violated a Massachusetts consumer protection law under these circumstances. Receivables Management Association International (RMA) filed an amicus brief supporting LVNV’s appeal seeking reversal of the lower court’s decision. In its brief, RMA International noted its long-standing work with the Massachusetts Division of Banks and Attorney General concerning the regulation of debt buyers.

Specifically, RMA highlighted to the regulators on many occasions the uniqueness and challenges associated with the split regulatory authority in Massachusetts law under which the Attorney General’s office regulates passive debt buyers as “creditors” (which do not require a license to collect debt) and the Division of Banks regulation of active debt buyers as “debt collectors” who must be licensed.

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