California Passes Law Extending Debt Collection Rules
The new year brings yet more distressing news from the Golden State. If you are in the commercial finance space, and you want to collect that gold in California, you will soon have to heed all the rules that, until now, only applied to consumer debt collectors.
Beginning July 1, 2025, commercial loans of $500,000 or less will be subject to the debt collection protections of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). What is potentially more troublesome is that the statute will apply not only to debt collectors, but creditors! That means that your in-house collection department will have to heed all the prohibitions and restrictions of the RFDCPA.
The rules are fairly straightforward and apply to debt collectors and creditors attempting to collect on their own paper. There are many, including:
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There is a plethora of other rules, but you get the picture.
There are other important issues, i.e.:
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One good thing about the expanded statute is that there is no licensing requirement for commercial debt collectors/creditors (yet!).
There is much more, but it is, as they say, beyond the scope of this article. My best advice is to have an attorney prepare a best practices guide to help you navigate this minefield. That is exactly what I am doing for my clients.
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Last modified: January 30, 2025Ken Greene is an attorney with the Law Office of Kenneth Charles Greene. To contact Ken, email: ken@kengreenelaw.com.