The California state legislature on Monday became the 35th state to require debt collectors to obtain licenses in order to operate, passing a measure that also establishes baseline practices that will be prohibited, should Gov. Gavin Newsom sign the bill into law.
Should the bill be signed into law — Gov. Newsom has 30 days once a bill is passed to approve or veto it — it will go into effect on Jan. 1, 2022.
The bill — SB 908 — was sponsored by state Sen. Bob Wieckowski. “For too long, the scales of justice have tipped favorably to the debt collectors’ advantage,” Wieckowski said, in a statement. “By more vigorously enforcing our laws, we can bring real justice to consumers and eliminate the misconduct and financial abuse that exists.”
Licenses will be required for anyone collecting debts who is located in California, or anyone, regardless of where they are located, who is attempting to collect from an individual who is located in California.
Licensees will be required to maintain surety bonds, pay all required fees, and submit an annual report detailing how much it collected from California residents, among other data points.
The California Association of Collectors and RMA International were both involved in representing the credit and collection industry’s position as the bill made its way through the state legislature, according to a published report.
Collectors would be prohibited from using any of the following tactics:
- 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.
