Bill in California Would Turn Auto Repair Shops into Debt Collectors

A bill under consideration in the California state legislature would turn auto repair shops into debt collectors under the state’s Rosenthal Fair Debt Collection Practices Act, if enacted.

AB 2825 has been referred to committee in the state legislature. A copy of the proposed legislation can be accessed by clicking here. It was originally written to just pertain to towing companies, but was amended last month to include auto repair shops, according to a published report.

Previously, automotive repair shops and towing companies were exempt from state debt collection laws.

The head lobbyist for the California Autobody Association is lobbying against the bill, saying that the bill becomes law, it would place undue restrictions on communications between repair shops and consumers.

“If this bill passes, communications will be regulated and subject to the laws that govern debt collectors,” said Jack Molodanof. “So, if you want to send the customer a friendly reminder for when the car is ready to be picked up, it’s now a whole different situation. If the customer does not respond and you send another email, text or phone call, for example, those could potentially be considered repetitive communications that might be construed as being unreasonable and a form of harassment. Before, collision repair shops were out of the loop when it came to these types of collection practices, but now they could easily be subject to strict liability, unnecessary fines, penalties and frivolous lawsuits.”

Companies that are subject to the law would also have to provide notices in Spanish, Chinese, Korean, Tagalog, and Vietnamese along with English.

The bill places a number of restrictions on what it defines as government debt collectors and towing debt collectors, including prohibiting any of the following conduct:

• The use, or threat of use, of physical force or violence or any criminal means to cause harm to the person, the reputation, or the property of any person.
• The threat that the failure to pay a government debt will result in an accusation that the debtor has committed a crime if the accusation, if made, would be false.
• The communication of, or threat to communicate to any person, the fact that a debtor has engaged in conduct, other than the failure to pay a government debt, that the government debt collector knows, or has reason to believe, will defame the debtor.
• The threat to the debtor to sell or assign to another person the obligation of the debtor to pay a government debt with an accompanying false representation that the result of the sale or assignment would be that the debtor would lose any defense to the government debt.
• The threat to any person that nonpayment of a government debt may result in the arrest of the debtor or the seizure, garnishment, attachment, or sale of any property or the garnishment or attachment of wages or payments of the debtor, unless that action is, in fact, contemplated by the government debt collector and permitted by law.
• The threat that the failure to pay a government debt will result in contacting immigration enforcement.