SB 908 increases oversight of industry as more Californians take on debt during Covid-19 pandemic
SACRAMENTO – A bill by Senator Bob Wieckowski (D-Fremont) to require the licensing of debt collectors and debt buyers in California moved one step closer to becoming law when it was approved today by the Assembly Banking and Finance Committee. SB 908 now advances to the Assembly Appropriations Committee. It has already passed the Senate.
“I have worked with a broad array of California’s top consumer organizations and the debt collectors and debt buyers on this legislation, and I am pleased to say the industry now supports SB 908 and the bill’s important consumer protections,” said Wieckowski, one of the Legislature’s leading voices on debt collection issues and their harmful effects on low-income Californians. “Consumer debt is at an all-time high and families living paycheck-to-paycheck need increased protection from unscrupulous players. This is especially true now that we are in a pandemic with high unemployment.”
Under SB 908, the state Department of Business Oversight (DBO) would license and regulate the industry. It would field complaints from borrowers and enforce violations. The bill would provide consumers a single location to see what companies are licensed, are operating without a license, and any actions taken against companies, including suspension or revocation. Funding would be derived from licensing fees on the industry.
Thirty-four states require a license in order to collect on consumer debt.
“The people who are hardest hit by the economic fallout of the pandemic will be the same ones exposed to debt collection, both immediately and over the long term,” said Marisabel Torres, director of California Policy, at the Center for Responsible Lending. “The Center for Responsible Lending is proud to support Senator Wieckowski’s legislation for increased oversight and enforcement authority.”
California passed fair debt collection laws in 1977, but their enforcement relies on individuals to sue the debt collection companies. Often, consumers do not have the time or resources to take such action. This allows companies to continue collecting against the wrong person, inflating the amount of money owed and other bad practices.
SB 908 would also require collection attorneys to be licensed by the DBO. Some law firms operate as collection mills and send out thousands of notices on their letterhead, which often frightens and intimidates consumers.
SB 908 is supported by California Low-Income Consumer Coalition, Consumer Reports, Public Law Center, Consumer Federation of California, Bay Area Legal Aid, East Bay Community Law Center, Bez Tzedek, Courage California, Western Center on Law and Poverty, and Consumers for Auto Reliability and Safety, among other groups.
Senator Wieckowski represents the 10 District, which includes southern Alameda County and parts of Santa Clara County.