California Fair Debt Buyers Practices Act Passes State Senate

California Fair Debt Buyers Practices Act Passes State Senate

By |February 1st, 2012|

california state senateCalifornia has moved towards final approval of The Fair Debt Buyers Practices Act (SB 890), setting the stage for regulations that affect debt buyers who try to collect from people.  What’s it mean to you?

Under the new law, introduced in 2011, debt buyers would need to produce actual proof that they are attempting to collect the correct amount of money from the right person. They would also need to provide certain disclosures, including one that lets you know that the debt is legally unenforceable by virtue of the statute of limitations (that’s the time allowed for collection) has passed.

This may not sound like it’s difficult or particularly onerous, but remember that consumer debt is sold by virtue of a computer record dump rather than with an entire paper trail attached to it. A debt buyer typically gets a computer file consisting of the consumer’s contact information, the credit card account number, open date, and balance due.

More information raises the cost to the debt buyer, so they don’t usually spring for it. Now they’re going to have to.

California consumers should breathe a sigh of relief, but need to remember that The Fair Debt Buyers Practices Act doesn’t prevent debt buyers from collecting. Rather, the Act provides for protections in the event that the debt buyer attempts to collect without providing required disclosures and maintaining proper documents.

You’re going to need to stay on your toes to watch out for shenanigans, and you’re going to need a good lawyer who’s up to snuff on this particular law. Any new law will evolve fairly quickly in the way it’s applied in the court system, and I expect to be no different.

Debt buyers who violate The Fair Debt Buyers Practices Act can be held liable to the consumer for damages of up to $2,000 plus legal fees and costs. In other words, the debt buyer who steps over the line will be the one paying your lawyer.

The press release from California Attorney General Kamala D. Harris can be found here.

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About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.