SACRAMENTO – Seeking to improve consumer protection for Californians, today State Senator Bob Wieckowski (D-Fremont) introduced legislation to license the debt collection industry, an industry that generates nearly a third of all complaints to the federal Consumer Financial Protection Bureau. SB 908 would require that debt collectors and buyers obtain a license from the state Department of Business Oversight (DBO) to collect on debts in the state.
“California licenses everyone from mattress renovators to barbers and cosmetologists, yet debt collectors, who can wreak havoc on a consumer’s finances, are not licensed,” said Wieckowski, a member of the Senate Judiciary Committee. “This glaring lack of oversight in the nation’s most populous state needs to end. This industry consistently violates consumer law and generated more than 400,500 consumer complaints between 2011 and 2018. We need a robust licensing requirement to enforce our laws and protect consumers.”
SB 908 would regulate and license the industry and have the DBO respond to complaints from borrowers and enforce violations. Although California passed the Rosenthal Fair Debt Collections Practices Act in 1977, to protect consumers from deceptive, dishonest, and unreasonable debt collection practices, the law does too little to rein in the abuses of debt collection companies. Consumers must sue a debt collection company on an individual basis. But left to go it alone, most consumers do not bother to file suit because they are unable to find an attorney to take their case.
Between 1927 and 1992, California did license debt collectors, but a sunset date lapsed and the industry has not been subject to licensing since then. Licensing is common in two-thirds of the nation, plus the District of Columbia, New York City, Chicago and even Carson City, Nevada.
By far, consumers’ most common complaint about debt collectors is attempts to collect a debt not owed. Other complaints concern communication tactics and written notification.
Senator Wieckowski represents the 10th district, which includes southern Alameda County and parts of Santa Clara County.