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SB-531 Consumer debt.(2021-2022)

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Date Published: 04/29/2021 09:00 PM
SB531:v95#DOCUMENT

Amended  IN  Senate  April 29, 2021
Amended  IN  Senate  April 19, 2021
Amended  IN  Senate  April 08, 2021
Amended  IN  Senate  March 24, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 531


Introduced by Senator Wieckowski

February 17, 2021


An act to amend Sections 1788.2 and 1788.52 of, and to add Sections 1788.14.4 and 1788.14.5 to, the Civil Code, relating to consumer debt.


LEGISLATIVE COUNSEL'S DIGEST


SB 531, as amended, Wieckowski. Consumer debt.
Existing law, the Rosenthal Fair Debt Collection Practices Act, regulates the collection of a consumer debt, as defined, by a debt collector. Existing law defines “debt collector” to mean a person who, in the ordinary course of business engages in debt collection, including any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection.
Existing law, the Debt Collection Licensing Act, prohibits, beginning January 1, 2022, a person from engaging in the business of debt collection in this state without first obtaining a license from the Commissioner of Financial Protection and Innovation. Existing law prohibits a debt buyer from making a written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer possesses specified information, including the date of default or the date of the last payment, and requires the debt buyer to include specified information in the written statement to the debtor. Existing law defines “debt buyer” to mean a person or entity that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes, whether it collects the debt itself, hires a third party for collection, or hires an attorney-at-law for collection litigation.
This bill would require a creditor or debt collector selling a delinquent debt, as defined, or assigning to a third party the right to collect payments on a delinquent debt, to provide a notice to the debtor within 5 days of the sale or assignment that contains the dollar amount of the outstanding debt and the name of the party who purchased or was assigned the delinquent debt. The bill would require the creditor or debt collector to provide the notice to the purchaser or assignee of the debt, debt and would prohibit that purchaser or assignee from making a written statement to a debtor in an attempt to collect a consumer debt until the purchaser or assignee possesses the notice. The bill would require a debt collector to which a delinquent debt has been assigned for collection to provide to the debtor, upon the debtor’s request, a written statement that includes certain information, including the date the debt became delinquent or the date of the last payment and a copy of the notice described above, within 30 calendar days of receipt of a debtor’s written request for information regarding the debt or proof of the debt, as specified. The bill would provide that a debt buyer who complies with the written statement requirements under the Debt Collection Licensing Act, including the notice possession provision added by this bill, is deemed to comply with this new requirement on a debt collector, to which a delinquent debt has been assigned, to provide a written statement to the debtor upon the debtor’s request.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 It is the intent of the Legislature that this act apply prospectively.

SECTION 1.SEC. 2.

 Section 1788.2 of the Civil Code is amended to read:

1788.2.
 (a) Definitions and rules of construction set forth in this section are applicable for the purpose of this title.
(b) The term “debt collection” means any act or practice in connection with the collection of consumer debts.
(c) The term “debt collector” means any person who, in the ordinary course of business, regularly, on behalf of that person or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection.
(d) The term “debt” means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person.
(e) The term “consumer credit transaction” means a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes.
(f) The terms “consumer debt” and “consumer credit” mean money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction. The term “consumer debt” includes a mortgage debt.
(g) The term “person” means a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity.
(h) Except as provided in Section 1788.18, the term “debtor” means a natural person from whom a debt collector seeks to collect a consumer debt that is due and owing or alleged to be due and owing from such person.
(i) The term “creditor” means a person who extends consumer credit to a debtor.
(j) The term “consumer credit report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (1) credit or insurance to be used primarily for personal, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under any applicable federal or state law or regulation. The term does not include (a) any report containing information solely as to transactions or experiences between the consumer and the person making the report; (b) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device; or (c) any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys that person’s decision with respect to that request, if the third party advises the consumer of the name and address of the person to whom the request was made, and the person makes the disclosures to the consumer required under any applicable federal or state law or regulation.
(k) The term “consumer reporting agency” means any person that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer credit reports to third parties and uses any means or facility for the purpose of preparing or furnishing consumer credit reports.
(l) The term “delinquent debt” means a consumer debt, other than a mortgage debt, that is past due at least 30 days and has not been charged off.

SEC. 2.SEC. 3.

 Section 1788.14.4 is added to the Civil Code, to read:

1788.14.4.
 (a) A creditor or debt collector shall not sell a delinquent debt or assign to a third party the right to collect payments on a delinquent debt unless the creditor or debt collector provides a notice to the debtor within five days after selling or assigning the delinquent debt that contains all of the following information:
(1) The dollar amount of the outstanding debt.
(2) The name of the party to whom the debt was sold or assigned.
(b) A creditor or debt collector shall provide the notice described in subdivision (a) to a purchaser or assignee of the debt that is the subject of that notice.

SEC. 3.SEC. 4.

 Section 1788.14.5 is added to the Civil Code, to read:

1788.14.5.
 (a) A debt collector to which a delinquent debt has been assigned for collection shall provide to the debtor, upon the debtor’s written request, a statement that includes all of the following information pursuant to subdivision (c):
(1) That the debt collector has authority to assert the rights of the creditor to collect the debt.
(2) (A) The debt balance and an explanation of the amount, nature, and reason for all interest and fees, if any, imposed by the creditor or any subsequent entities to which the debt was assigned.
(B) The explanation required by subparagraph (A) shall identify separately the balance, the total of any interest, and the total of any fees.
(3) The date the debt became delinquent or the date of the last payment.
(4) The name and an address of the creditor and the creditor’s account number associated with the debt. The creditor’s name and address shall be in sufficient form so as to reasonably identify the creditor.
(5) The name and last known address of the debtor as they appeared in the creditor’s records before the assignment of the debt to the debt collector.
(6) The names and addresses of all persons or entities other than the debt collector to which the debt was assigned. The names and addresses shall be in sufficient form so as to reasonably identify each assignee.
(7) The California license number of the debt collector.
(8) A copy of the notice sent to the debtor pursuant to Section 1788.14.4.
(b) A debt collector to which delinquent debt has been assigned shall not make a written statement to a debtor in an attempt to collect a delinquent consumer debt unless the debt collector has access to both of the following:
(1) (A) Except as provided in subparagraph (B), a copy of a contract or other document evidencing the debtor’s agreement to the debt.
(B) (i) If the claim is based on debt for which no signed contract or agreement exists, the debt collector shall have access to a copy of a document provided to the debtor while the account was active, demonstrating that the debt was incurred by the debtor.
(ii) For a revolving credit account, the most recent monthly statement recording a purchase transaction, last payment, or balance transfer shall be deemed sufficient to satisfy the requirements of this subparagraph.
(2) A copy of the notice sent to the debtor pursuant to Section 1788.14.4.
(c) (1) A debt collector to which delinquent debt has been assigned shall provide the information or documents identified in subdivisions (a) and (b) to the debtor without charge within 30 calendar days of receipt of a debtor’s written request for information regarding the debt or proof of the debt.
(2) If the debt collector cannot provide the information or documents within 30 calendar days, the debt collector shall cease all collection of the debt until the debt collector provides the debtor the information or documents described in subdivisions (a) and (b).
(d) (1) A debt collector shall provide a debtor with whom it has contact an active postal address to which a debtor may send a request for the information described in this section.
(2) A debt collector may also provide an active email address to which these requests can be sent and through which information and documents can be delivered if the parties agree.
(e) (1) A debt collector to which delinquent debt has been assigned shall include in its first written communication with the debtor in no smaller than 12-point type, a separate prominent notice that contains the following statement:
“You may request records showing the following: (1) that [insert name of debt collector] has the right to seek collection of the debt; (2) the debt balance, including an explanation of any interest charges and additional fees; (3) the date the debt became delinquent or the date of the last payment; (4) the name of the creditor and the account number associated with the debt; (5) the name and last known address of the debtor as it appeared in the creditor’s records prior to assignment of the debt; and (6) the names of all persons or entities other than the debt collector to which the debt has been assigned, if applicable. You may also request from us a copy of the contract or other document evidencing your agreement to the debt.
A request for these records may be addressed to: [insert debt collector’s active mailing address and email address, if applicable].”
(2) If a language other than English is principally used by the debt collector in the initial oral contact with the debtor, the notice required by this subdivision shall be provided to the debtor in that language within five business days.
(f) (1) A debt buyer that complies with the requirements of Section 1788.52 shall be deemed to be in compliance with this section.
(2) For purposes of this subdivision, “debt buyer” shall have the same meaning as in Section 1788.50.

SEC. 4.SEC. 5.

 Section 1788.52 of the Civil Code is amended to read:

1788.52.
 (a) A debt buyer shall not make any written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer possesses the following information:
(1) 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.
(2) 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.
(3) The date of default or the date of the last payment.
(4) 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.
(5) 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.
(6) 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.
(7) The California license number of the debt buyer.
(8) A copy of the notice sent to the debtor pursuant to Section 1788.14.4.
(b) A debt buyer shall not make any written statement to a debtor in an attempt to collect a consumer debt unless the debt buyer has access to a copy of a contract or other document evidencing the debtor’s agreement to the debt. If the claim is based on debt for which no signed contract or agreement exists, the debt buyer shall have access to a copy of a document provided to the debtor while the account was active, demonstrating that the debt was incurred by the debtor. For a revolving credit account, the most recent monthly statement recording a purchase transaction, last payment, or balance transfer shall be deemed sufficient to satisfy this requirement.
(c) A debt buyer shall provide the information or documents identified in subdivisions (a) and (b) to the debtor without charge within 15 calendar days of receipt of a debtor’s written request for information regarding the debt or proof of the debt. If the debt buyer cannot provide the information or documents within 15 calendar days, the debt buyer shall cease all collection of the debt until the debt buyer provides the debtor the information or documents described in subdivisions (a) and (b). Except as provided otherwise in this title, the request by the debtor shall be consistent with the validation requirements contained in Section 1692g of Title 15 of the United States Code. A debt buyer shall provide all debtors with whom it has contact an active postal address to which these requests can be sent. A debt buyer may also provide an active email address to which these requests can be sent and through which information and documents can be delivered, if the parties agree.
(d) (1) A debt buyer shall include with its first written communication with the debtor in no smaller than 12-point type, a separate prominent notice that provides:

“You may request records showing the following: (1) that [insert name of debt buyer] has the right to seek collection of the debt; (2) the debt balance, including an explanation of any interest charges and additional fees; (3) the date of default or the date of the last payment; (4) the name of the charge-off creditor and the account number associated with the debt; (5) the name and last known address of the debtor as it appeared in the charge-off creditor’s or debt buyer’s records prior to the sale of the debt, as appropriate; and (6) the names of all persons or entities that have purchased the debt. You may also request from us a copy of the contract or other document evidencing your agreement to the debt.
“A request for these records may be addressed to: [insert debt buyer’s active mailing address and email address, if applicable].”

(2) When collecting on a time-barred debt where the debt is not past the date for obsolescence provided for in Section 605(a) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681c):

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt buyer] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”

(3) When collecting on a time-barred debt where the debt is past the date for obsolescence provided for in Section 605(a) of the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681c):

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”

(e) If a language other than English is principally used by the debt buyer in the initial oral contact with the debtor, the notice required by subdivision (d) shall be provided to the debtor in that language within five working days.
(f) In the event of a conflict between the requirements of subdivision (d) and federal law, so that it is impracticable to comply with both, the requirements of federal law shall prevail.