SACRAMENTO – The Senate Banking and Financial Institutions Committee today approved a bill by Senator Bob Wieckowski (D-Fremont) to strengthen notification requirements on assigned debt collection and give consumers more rights to request information from the collectors.
“This is a common-sense solution to a frequent consumer problem,” said Senator Wieckowski, the author of several bills to rein in debt collection abuses. “Attempts to collect on debt not owed is a complaint lodged by thousands of consumers every year. “By making assigned debt collectors adhere to some of the same higher standards of the Fair Debt Buying Practices Act (FDBPA) that governs sold debt, we will be able to achieve greater transparency and protections for consumers. They can request proof that the assigned collector has the authority to collect the debt. If a stranger you never heard of claims you owe them money, you would make sure you, in fact, do owe them money before you paid. At its core, this is about basic record keeping.”
In 2013, the FDBPA reformed a broken system of debt buying in California. There were widespread cases of collecting against the wrong person, targeting debt that had already been paid off and efforts to collect on incorrect amounts. The FDBPA requires debt buyers to have proof of their ownership and it allows the debtor to request that proof. It also requires the disclosure of other basic information, such as how much debt is owed, any fees or interest and the date of the last payment.
Legal service providers say some debt collectors are asserting they are collecting on assigned debt, not sold debt, to circumvent the consumer protections in the FDBPA. Often, the consumer has never heard of the collection firm.
“Our clients know the original creditors to which they owe money, and they are much more likely to review mail sent by the original creditor,” said Leigh Ferrin, director of litigation and pro bono at the Public Law Center, a nonprofit organization providing free legal services to low-income individuals in Orange County. “SB 531 will require the original creditor to provide the information of the entity that will be collecting the debt, will allow debtors to better understand the process of debt collection and will allow them the opportunity to resolve their debts much earlier in the process, before excessive fees and costs have been added on.”
SB 531 is also supported by the Western Center on Law and Poverty, the California Low-Income Consumer Coalition, the Center for Responsible Lending and Neighborhood Legal Services of Los Angeles County.
Senator Wieckowski represents the 10th District, which includes parts of Alameda and Santa Clara counties.