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Massachusetts Attorney General Increasing Enforcement In Car Repossession Space – Contracts and Commercial Law

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The Massachusetts Attorney General (AG) is increasing its
enforcement in the motor-vehicle-repossession space. In a January
17, 2023 Assurance of Discontinuance (AOD), the AG stated that it
is “conducting an investigation” into “entities
collecting, servicing and/or funding” motor-vehicle-secured
retail-installment contracts. The AG is focused on two primary
areas of compliance:

  • the content of the pre-sale and post-sale repossession notices
    and, in particular, that the notices include a statement that a
    customer’s deficiency after auctioning their vehicle would be
    based on the vehicle’s fair-market value; and

  • the frequency of phone calls to debtors and whether those calls
    exceed the limits prescribed by 940 CMR 7.04(1)(f).

The current industry sweep is part of the AG’s larger focus
on the treatment of consumers who own motor vehicles. For example,
on March 9, 2023, the AG announced that she will start enforcing
the automotive right-to-repair law, which requires that automakers
provide consumers and repair shops with “telematics”
information so that independent repair shops can perform the same
services as authorized dealers.

Certain Pre-Sale and Post-Sale Notices Must Include Fair-Market

The Motor Vehicle Retail Installment Sales Act governs the
repossession and sale of motor vehicles under retail-installment
contracts. The statute includes detailed requirements for the
content of pre-sale and post-sale repossession notices. In
Williams v. Am. Honda Fin. Corp., 479 Mass. 656, 669
(2018), the Massachusetts Supreme Judicial Court found that
creditors should include the following information in pre-sale
notices under § 9-614(3):

The fair market value of your vehicle will be used to reduce the
amount you owe, which is your outstanding balance plus the
reasonable costs of repossessing and selling the vehicle. If the
fair market value of your vehicle is less than you owe, you (will
or will not, as applicable) still owe us the difference. If the
fair market value of your vehicle is more than you owe, you will
get the extra money, unless we must pay it to someone else.

The court concluded that this required language should also be
added to post-sale deficiency notices. Id. at 668
(“We conclude that the notice that is required by the Uniform
Commercial Code is never sufficient where the deficiency is not
calculated based on the fair market value of the collateral and the
notice fails to accurately describe how the deficiency is

The court also clarified that “fair market value”
(which is not defined in the MVRISA) is “the highest price
which a hypothetical willing buyer would pay to a hypothetical
willing seller in an assumed free and open market.”
Id. at 661 (citations and quotations omitted).

Collection Calls

The AOD also bars the company from initiating phone calls more
frequently than the limits prescribed in 940 CMR 7.04(1)(f), which

It shall constitute an unfair or deceptive act or practice for a
creditor to contact a debtor . . . [by] [i]nitiating a
communication with any debtor via telephone, either in person or
via text messaging or recorded audio message, in excess of two such
communications in each seven-day period to either the debtor’s
residence, cellular telephone, or other telephone number provided
by the debtor as his or her personal telephone number….

In Armata v. Target Corp., 480 Mass. 14 (2018), the
Supreme Judicial Court of Massachusetts interpreted this to limit a
creditor to two phone calls within a seven-day period. This
includes calls where the creditor was unable to reach the customer
and left a voicemail. While the AOD itself does not include any
analysis of how many phone calls it believes is appropriate,
presumably the AG is applying the same limitations laid out by

How to Prepare

Companies should evaluate their collection-call practices and
pre-sale and post-sale repossession notices to Massachusetts
debtors to anticipate and mitigate any potential risks.
McGuireWoods’ state attorneys general
helps clients navigate these challenging waters and
advises clients on how to audit their notices and business
policies. Proactive compliance helps debt collectors limit the
scope of potential enforcement actions.

McGuireWoods would be happy to speak with your team to share
experience-based insights about these challenging issues and to
assist with responding to any inquiries from the AG.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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