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SB-373 Consumer debt: economic abuse.(2021-2022)

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Date Published: 03/24/2021 09:00 PM
SB373:v98#DOCUMENT

Amended  IN  Senate  March 24, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 373

Introduced by Senator Min
(Principal coauthor: Senator Rubio)
(Coauthor: Assembly Member Chiu)

February 10, 2021

An act to amend Section 1785.13 of, and to add Section 1788.53 to, 1788.19 to the Civil Code, relating to consumer debt.


LEGISLATIVE COUNSEL'S DIGEST


SB 373, as amended, Min. Consumer debt: economic abuse.
Existing law law, the Rosenthal Fair Debt Collection Practices Act, regulates the activities of debt buyers and defines a debt buyer for these purposes as a person or entity that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether or not it collects the debt itself. Existing state and federal law define and regulate consumer credit reporting agencies. collectors. Existing state law, the Consumer Credit Reporting Agencies Act, prohibits a consumer credit reporting agency from making a consumer credit report that contains specified types of information. person from furnishing information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate.
This bill would prohibit a debt buyer collector from collecting or attempting to collect a consumer debt if the consumer provides documentation documentation, as specified, to the debt buyer collector that the debt debt, or any portion of the debt debt, is the result of economic abuse, as defined. The bill would prescribe a noninclusive list of sufficient documentation of economic abuse for this purpose. The bill would prohibit a buyer debt collector from requiring a court order or a police report to prove that the debt is the result of economic abuse. The bill would also prohibit a consumer credit reporting agency from including in a consumer credit report accounts about which a consumer has provided the consumer credit reporting agency documentation that the debt, or any portion of the debt, is the result of economic abuse, as specified. The bill would also provide that information regarding a consumer debt documented to result from economic abuse pursuant to these provisions is incomplete or inaccurate for purposes of the Consumer Credit Reporting Agencies Act provision described above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Economic abuse is a serious issue impacting survivors of domestic violence, elder or dependent adult abuse, foster youth, and other individuals.
(b) Coerced or fraudulent debts, a common component of economic abuse, can ruin an individual’s credit history and financial stability, including by leaving the individual vulnerable to debt collection, substantial payment expectations, and bankruptcy.
(c) The debt and poor credit score resulting from economic abuse impact can have long-term consequences for survivors that create barriers to education, housing, and employment opportunities.
(d) Fifty-two percent of domestic violence survivors report experiencing coerced and fraudulent debt of over $10,000 per year.
(e) In cases of elder abuse, family members and other trusted individuals can use their powerful position to commit this type of abuse and take out debts through coercion or fraud.
(f) Youth in foster care are particularly vulnerable because they may have multiple placements that give many adults access to their personal information.
(g) A pilot project in the City of Los Angeles worked with over 100 foster youth who had hundreds of separate accounts reported in their names as the result of errors or identity theft. A 2018 survey conducted by the Identity Theft Resource Center (ITRC) and Symantec that included youth in the Counties of Santa Clara and San Diego found that 15 percent of foster youth surveyed were victims of identity theft.

SEC. 2.

 Section 1788.19 is added to the Civil Code, immediately following Section 1788.18, to read:

1788.19.
 (a) (1) A debt collector shall not collect or attempt to collect a consumer debt if the consumer provides documentation to the debt collector that the debt, or any portion of the debt, is the result of economic abuse.
(2) Sufficient documentation of economic abuse for purposes of this subdivision includes, but is not limited to, all of the following:
(A) A copy of a protective order lawfully issued pursuant to Section 6340 of the Family Code, Section 136.2 of the Penal Code, or Section 213.5 or 15657.03 of the Welfare and Institutions Code.
(B) A police report indicating the individual was a victim of domestic violence or elder abuse.
(C) A Federal Trade Commission identity theft report.
(D) Documentation from a licensed medical professional, domestic violence counselor, as defined in Section 1037.1 of the Evidence Code, a sexual assault counselor, as defined in Section 1035.2 of the Evidence Code, licensed health care provider, attorney, social worker, or counselor stating that the debt was incurred as a result of economic abuse.
(b) A debt collector shall not require a court order or a police report to prove that the debt is the result of economic abuse.
(c) Information regarding a consumer debt documented to result from economic abuse pursuant to this section shall be deemed incomplete or inaccurate for purposes of subdivision (a) of Section 1785.25.
(d) For purposes of this section, “economic abuse” means a person causing or attempting to cause an individual to have impaired financial stability by maintaining control over the individual’s financial resources, including, but not limited to, unauthorized or coerced use of credit or property, withholding access to money or credit cards, forbidding attendance at school or employment, stealing or defrauding money or assets, exploiting the individual’s resources for personal gain, or withholding physical resources, including food, clothing, necessary medications, or shelter.

SECTION 1.Section 1785.13 of the Civil Code is amended to read:
1785.13.

(a)No consumer credit reporting agency shall make any consumer credit report containing any of the following items of information:

(1)Bankruptcies that, from the date of the order for relief, antedate the report by more than 10 years.

(2)Suits and judgments that, from the date of entry or renewal, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

(3)Unlawful detainer actions, unless the lessor was the prevailing party. For purposes of this paragraph, the lessor shall be deemed to be the prevailing party only if (A) final judgment was awarded to the lessor (i) upon entry of the tenant’s default, (ii) upon the granting of the lessor’s motion for summary judgment, or (iii) following trial, or (B) the action was resolved by a written settlement agreement between the parties that states that the unlawful detainer action may be reported. In any other instance in which the action is resolved by settlement agreement, the lessor shall not be deemed to be the prevailing party for purposes of this paragraph.

(4)Paid tax liens that, from the date of payment, antedate the report by more than seven years.

(5)Accounts placed for collection or charged to profit and loss that antedate the report by more than seven years.

(6)Records of arrest, indictment, information, misdemeanor complaint, or conviction of a crime that, from the date of disposition, release, or parole, antedate the report by more than seven years. These items of information shall no longer be reported if at any time it is learned that in the case of a conviction a full pardon has been granted, or in the case of an arrest, indictment, information, or misdemeanor complaint a conviction did not result.

(7)Any other adverse information that antedates the report by more than seven years.

(8)Accounts about which a consumer has provided the consumer credit reporting agency documentation, as described in Section 1788.53, that the debt, or any portion of the debt, is the result of economic abuse, as defined in Section 1788.53.

(b)The seven-year period specified in paragraphs (5) and (7) of subdivision (a) shall commence to run, with respect to any account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency that immediately preceded the collection activity, charge to profit and loss, or similar action. Where more than one of these actions is taken with respect to a particular account, the seven-year period specified in paragraphs (5) and (7) shall commence concurrently for all these actions on the date of the first of these actions.

(c)Any consumer credit reporting agency that furnishes a consumer credit report containing information regarding any case involving a consumer arising under the bankruptcy provisions of Title 11 of the United States Code shall include an identification of the chapter of Title 11 of the United States Code under which the case arose if that can be ascertained from what was provided to the consumer credit reporting agency by the source of the information.

(d)A consumer credit report shall not include any adverse information concerning a consumer antedating the report by more than 10 years or that otherwise is prohibited from being included in a consumer credit report.

(e)If a consumer credit reporting agency is notified by a furnisher of credit information that an open-end credit account of the consumer has been closed by the consumer, any consumer credit report thereafter issued by the consumer credit reporting agency with respect to that consumer, and that includes information respecting that account, shall indicate the fact that the consumer has closed the account. For purposes of this subdivision, “open-end credit account” does not include any demand deposit account, such as a checking account, money market account, or share draft account.

(f)Consumer credit reporting agencies shall not include medical information in their files on consumers or furnish medical information for employment, insurance, or credit purposes in a consumer credit report without the consent of the consumer.

(g)A consumer credit reporting agency shall include in any consumer credit report information, if any, on the failure of the consumer to pay overdue child or spousal support, where the information either was provided to the consumer credit reporting agency pursuant to Section 4752 or has been provided to the consumer credit reporting agency and verified by another federal, state, or local governmental agency.

SEC. 2.Section 1788.53 is added to the Civil Code, to read:
1788.53.

(a)A debt buyer shall not collect or attempt to collect a consumer debt if the consumer provides documentation to the debt buyer that the debt or any portion of the debt is the result of economic abuse. Sufficient documentation of economic abuse for purposes of this section includes, but is not limited to, the following:

(1)A copy of a protective order lawfully issued pursuant to Section 6340 of the Family Code, Section 136.2 of the Penal Code, or Section 213.5 or 15657.03 of the Welfare and Institutions Code.

(2)A police report indicating the individual was a victim of domestic violence or elder abuse.

(3)A Federal Trade Commission Identity Theft Affidavit.

(4)Documentation from a licensed medical professional, domestic violence counselor, as defined in Section 1037.1 of the Evidence Code, a sexual assault counselor, as defined in Section 1035.2 of the Evidence Code, licensed health care provider, attorney, social worker, or counselor stating that the debt was incurred as a result of economic abuse.

(b)A debt buyer shall not require a court order or a police report to prove that the debt is the result of economic abuse.

(c)For purposes of this section, “economic abuse” means a person causing or attempting to cause an individual to have impaired financial stability by maintaining control over the individual’s financial resources, including, but not limited to, unauthorized or coerced use of credit or property, withholding access to money or credit cards, forbidding attendance at school or employment, stealing or defrauding money or assets, exploiting the individual’s resources for personal gain or withholding physical resources such as food, clothing, necessary medications, or shelter.