New Maine law to protect abuse survivors’ finances is illegal, credit agencies say in lawsuit

The nation’s largest credit reporting agencies are suing Maine over the state’s first-of-its-kind law to protect survivors of domestic violence from poor credit reports as a result of economic abuse by their estranged partners.

In the lawsuit filed in U.S. District Court in Bangor, the Data Industry Association contends that Maine’s new law is pre-empted by the federal Fair Credit Reporting Act of 1996, and that Congress prohibited states from interfering in credit reporting. The association represents the nation’s large credit reporting agencies, including Experian, TransUnion and Equifax, and other smaller agencies.

The lawsuit also contends that another new Maine law, limiting the reporting of medical debt as part of a credit report, is illegal.

The economic abuse law, sponsored by Rep. Jessica Fay, D-Raymond, passed the Legislature unanimously and was signed by Democratic Gov. Janet Mills in June soon after its final passage. It went on the books last month with hundreds of other new laws in Maine.

The law focuses on debts incurred under a survivor’s name by an abusive partner who runs up excessive charges on a credit card or takes other actions that could damage someone’s finances and affect their credit rating.

While other states have passed laws defining economic abuse, Maine’s law is the first to require those debts to be excluded from a credit report.

Fay said she introduced the bill on behalf of constituents she met while campaigning. She said Tuesday she was disappointed with the lawsuit, but believes the law will stand up to legal scrutiny as the preemption issue was carefully considered during deliberation on the bill.

Fay said a damaged credit rating is often a contributing factor in keeping someone stuck in an abusive relationship, as that person does not have the financial resources to break free and a bad credit rating can affect their ability to get a job.

“If you have had your credit ruined by an abusive partner that does more than just impact your credit rating,” Fay said during a phone interview from the Maine Women’s Lobby Summit on Economic Security at the Civic Center in Augusta on Wednesday. “It’s about being able to leave a potentially abusive relationship – the ramifications of this are a lot greater than not being able to open a new credit card.”

Marc Malon, a spokesman for Maine Attorney General Aaron Frey, said in an email that the attorney general would not comment on pending litigation but did intend to defend the state’s law.

Those who testified in support of the new economic abuse law this year said their abusers often controlled their finances and racked up hundreds of thousands of dollars of bad debt in their names, leaving them in financial ruin once the relationship was over.

Testimony in support of the bill included information from the Maine Coalition to End Domestic Violence, which surveyed 135 survivors of domestic violence in Maine in 2018 and found that 89 percent reported that their abusive partners reacted either negatively or very negatively when the issue of finances came up.

The survey also showed that 74 percent said they were either never, infrequently or only occasionally accustomed to making their own financial decisions when in the abusive relationship; 72 percent said their abusive partners lied to them about money all the time or frequently; 72 percent said they had their personal purchases monitored all the time or frequently; and 63 percent said they always or frequently hid personal purchases for their children from their abusive partners.

In addition, 81 percent of domestic violence survivors said financial issues were a barrier when they tried to break away from an abusive relationship, Francine Garland Stark, the coalition’s executive director, told lawmakers in April.