Research Assistant Weekly 5/13/22

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During our last two RA Peer Group calls there have been several questions regarding CA SB-531 which goes into effect July 1, 2022 so I thought I would break down a couple of the key implications of this bill.

SB-531 further amends the Rosenthal Fair Debt Collection Practices Act to expand consumer rights and notification requirements for debt collectors.

Consumer Rights Changes

Upon a consumer’s written request a debt collector must supply a statement to the consumer within 30 calendar days of receipt which includes the following:

That the debt collector has the authority to assert the rights of the creditor to collect the debt.
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. (The explanation required shall identify separately the balance, the total of any interest, and the total of any fees.)
The date the debt became delinquent or the date of the last payment.
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 a form sufficient to reasonably identify the creditor.
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.
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 a form sufficient so as to reasonably identify each assignee.
The California license number of the debt collector.

Additionally, a debt collector is prohibited from making any written statements to a consumer in an attempt to collect a debt unless the debt collector has access to a copy of the contract or other document evidencing the consumer’s agreement. There are some exceptions to this rule including substituting a contract with a similar document if no contract exists, or a recent monthly statement for revolving credit accounts.

If a debt collector is unable to provide this information within 30 calendar days from the date of receipt then they must cease all collection of the debt until the documentation is provided.

Debt collectors must also provide consumers with an address and/or email address where these requests can be made.

New Notification Requirements
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].”

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.

Okay, so there’s a lot going on here. Mainly, they have vastly expanded verification requirements. But here’s where the bill really is causing confusion- what types of debt does this apply too?

The bill defines “delinquent debt” as a consumer debt, other than a mortgage debt, that is past due at least 90 days and has not been charged off.

Research Assistant Perspective: If you are questioning whether or not you must comply with the requirement of this bill it would be wise to begin reaching out to your client to determine whether the accounts you receive are “charged-off”. This may seem simple but the interpretation of “charge-off” can vary drastically. You may also include the question, how do you define charge-off.

Some of our members mentioned that they were considering implementing the disclosure and verification process to be safe due the interpretation concerns. Ultimately, this may be one of those scenarios where you will need to work with your attorney to make the best risk-based decision for your organization.

Join us this upcoming week for additional insights into this topic!