AUGUSTA -A first-of-its-kind Maine law to protect survivors of domestic violence from poor credit reports as a result of economic abuse by their estranged partners has been upheld by the First Circuit Court of Appeals. The bill from Representative Jessica Fay was widely celebrated by domestic violence advocates when it passed in 2019. However, the U.S. District Court of Maine invalidated a critical piece of the law in a case brought by the consumer data industry in 2020. Maine Attorney General Aaron Frey filed an appeal and, earlier this year, the First Circuit Court of Appeals reversed the lower court's decision. This summer, the Consumer Financial Protection Bureau ("CFPB") ruled, citing the First Circuit's decision, that states have wide latitude to regulate financial protections for its citizens.
"There are so many ways an abuser can exhibit control, and in cases of domestic violence, most survivors say finances were one of the greatest barriers to exiting a harmful relationship. I am grateful to Attorney General Frey for fighting to protect this law for survivors of domestic abuse," said Rep. Jess Fay, D-Raymond, who sponsored the bill. "When writing this bill for Maine, we worked diligently to do so within the confines of federal law, and we stood by our final product. As of today, this Maine law is now setting the national standard."
As enacted, the Maine law does four things: It defines economic abuse, it gives the courts broader discretion in protection from abuse cases to issue monetary relief orders that help survivors address economic abuse issues, it requires third-party debt collectors to stop collecting on debts that are a result of economic abuse and it requires credit reporting agencies to stop reporting on debts that are a result of economic abuse.
In the initial lawsuit, filed by the Consumer Data Industry Association, the U.S. District Court ruled that the credit repair provision of the law is preempted by the federal Fair Credit Reporting Act of 1996 ("FRCA"), and that Congress prohibits states from interfering in credit reporting. The First Circuit rejected this argument. On June 28, 2022, the Consumer Financial Protection Bureau ("CFPB") issued an interpretive rule concluding that FCRA's preemptive scope is narrow. The CFPB directly cited the First Circuit decision in Maine's case and the OAG's argument in stating that the states "retain substantial flexibility to pass laws involving consumer reporting to reflect emerging problems affecting their local economies and citizens."
"Credit reporting can have a profound impact on a person's life. Maines law justly restricts reporting of debt incurred as a result of economic abuse," said Attorney General Frey. "We are grateful to Rep. Fay for her devotion to this critical issue and for giving us the opportunity to protect the financial future of Maine survivors."
"We know 81% of survivors in Maine report economic abuse as a barrier to separating from an abusive partner. For the vast majority of survivors, economic abuse impairs their credit long term making it hard to secure stable housing, good jobs and financial independence," said Francine Garland Stark, Executive Director for the Maine Coalition to End Domestic Violence. "We were proud Rep. Fay pushed for this bill to pass in Maine and we are grateful to Attorney General Frey and his team for pursuing the relief that the legislature recognized is essential to the financial security of survivors in Maine."
Rep. Fay, who represents part of Casco, part of Poland and part of Raymond, is in her third term in the House. She serves on the Legislature's Joint Standing Committee on Appropriations and Financial Affairs and the Government Oversight Committee.
Contact:
Jenna Howard [Fay], 214-3185;
Danna Hayes [OAG], 512-6684