California Committee Approves Fair Debt Buyers Practices Act

A California General Assembly committee approved a bill Wednesday that would place more restrictions on debt buyers operating in the state. The primary impact of the bill would be to require more documentation from buyers during the debt collection process.

The bill – SB 890, also known as The Fair Debt Buyers Practices Act, authored by Sen. Mark Leno (D-San Francisco) – was passed by the Assembly Judiciary Committee. The legislation now goes to another Assembly committee, the Banking Committee, for consideration.

California’s full Senate approved the bill in February.

At that time, California Attorney General Kamala Harris – who sponsored the bill – said it would prohibit debt buyers from obtaining a judgment in a debt collection lawsuit unless the debt buyer can document their ownership of the debt, the balance of the debt, the date of the default or last payment, the identity of prior owners of the debt and the name and address of the debtor in the original creditor’s records.

“Too often, a consumer can get ensnarled in a long and costly battle to prove they are not the ones responsible for debt,” said Harris in February. “The Fair Debt Buyers Practices Act will put reasonable requirements on debt buyers and ensure consumers are not forced to pay the debts of others.”

Leno said Wednesday, “This legislation provides critical consumer protections against debt buyers who use aggressive and abusive tactics to collect funds when they cannot even prove they are targeting the right consumer for the correct amount. We have worked with the debt collector and debt buyer trade associations to come up with a practical bill that significantly improves the way consumers are treated by representatives from the ever-growing debt collection industry.”

Jan Stieger, executive director of debt buying association DBA International, noted that the ARM industry was a very active participant in the bill’s process. “As part of an industry coalition, DBA International spent hours in negotiations with Leno and Harris and their offices,” said Stieger.

The bill was introduced in the Senate in February 2011, but was stalled in that body over the summer, in large part due to advocacy work by DBA International. The bill approved in committee Wednesday is significantly different than the one introduced last year.