The California state Senate on Friday approved a measure that would require debt collectors in The Golden State to require licenses in order to operate as well as establish provisions under which collectors and debt buyers can collect on unpaid debts. The bill has now been introduced in the state Assembly for consideration.
About three dozen states nationwide require collectors and/or collection agencies to require licenses in order to operate. If enacted, the licensing requirement would go into effect on Jan. 1, 2022. Under the bill, collectors would be prohibited from attempting to collect a debt using any of the following practices:
- Using obscene or profane language.
- Placing a telephone call without disclosing the caller’s identity, provided that an employee of a licensed collection agency may identify oneself by using their registered alias name if they correctly identify the agency that they represent. A debt collector shall provide its California debt collector license number upon the consumer’s request.
- Causing expense to any person for long distance telephone calls, telegram fees, or charges for other similar communications, by misrepresenting to the person the purpose of the telephone call, telegram or similar communication.
- Causing a telephone to ring repeatedly or continuously to annoy the person called.
- Communicating, by telephone or in person, with the debtor with such frequency as to be unreasonable, and to constitute harassment of the debtor under the circumstances.
- Sending written or digital communication to the person that does not display the California license number of the collector in at least 12-point type.
Debt buyers, meanwhile, would need to have the following information in order to send a written notice to an individual:
- That the debt buyer is the sole owner of the debt at issue or has authority to assert the rights of all owners of the debt.
- The debt balance at charge off and an explanation of the amount, nature, and reason for all post-charge-off interest and fees, if any, imposed by the charge-off creditor or any subsequent purchasers of the debt. This paragraph shall not be deemed to require a specific itemization, but the explanation shall identify separately the charge-off balance, the total of any post-charge-off interest, and the total of any post-charge-off fees.
- The date of default or the date of the last payment.
- The name and an address of the charge-off creditor at the time of charge off, and the charge-off creditor’s account number associated with the debt. The charge-off creditor’s name and address shall be in sufficient form so as to reasonably identify the charge-off creditor.
- The name and last known address of the debtor as they appeared in the charge-off creditor’s records prior to the sale of the debt. If the debt was sold prior to January 1, 2014, the name and last known address of the debtor as they appeared in the debt owner’s records on December 31, 2013, shall be sufficient.
- The names and addresses of all persons or entities that purchased the debt after charge off, including the debt buyer making the written statement. The names and addresses shall be in sufficient form so as to reasonably identify each such purchaser.
- The California license number of the debt buyer.
Debt buyers would also be required to provide additional disclosures when attempting to collect on time-barred debts.
When determining whether an applicant is eligible for a license, the state’s Department of Business Oversight would be allowed to consider:
- Criminal, civil, and administrative history information.
- Personal history and experience information, including, but not limited to, independent credit reports obtained from a consumer reporting agency.
- Any other documents, information, or evidence that the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of those documents, information, or evidence.
“We license all sorts of professions in California that do not have the power to do the financial harm to individuals that debt collectors can do by garnishing wages and seizing people’s assets,” said state Sen. Bob Wieckowski, a member of the Judiciary Committee and the sponsor of the bill, in a statement. “It is a gaping loophole that needs to be closed to protect California consumers, especially when so many are struggling through this pandemic.”