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AB-174 Amended To Include Forwarders As “Collection Agency”

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION


ASSEMBLY BILL
NO. 1754


Introduced by Assembly Member Chen
February 01, 2022


An act to amend Sections 100002 and 100006.5 of the Financial Code, relating to debt collection.



LEGISLATIVE COUNSEL’S DIGEST

AB 1754, as introduced, Chen. Debt Collection Licensing Act: collection agencies.
Existing law, the Debt Collection Licensing Act, provides for the licensure, regulation, and oversight of debt collectors by the Commissioner of Business Oversight. The act prohibits a person from engaging in the business of debt collecting in this state without a license and requires a licensee to comply with reporting, examination, and other oversight by the commissioner. Existing law defines a collection agency as a business entity through which a debt collector or an association of debt collectors engage in debt collection. Existing law requires a person applying for a license to, among other things, pay an application fee, sign the application under penalty of perjury, and submit to a criminal background check by the Department of Justice.
This bill would revise the definition of a collection agency to additionally include a business entity that acts as a broker, forwarder, intermediary, or middleman that sends or refers repossession assignments or repossession orders to repossession agencies or repossession agents in California. By expanding the pool of applicants required to apply for a license under the act, this bill would expand the scope of the crime of perjury, thereby imposing a state-mandated local program.
The bill would also make nonsubstantive changes to the act.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

DIGEST KEY

Vote: majority   Appropriation: no   Fiscal Committee: yes   Local Program: yes  


BILL TEXT

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.

Section 100002 of the Financial Code is amended to read:

 

100002.

For purposes of this division, the following terms have the following meanings:

(a) “Applicant” means a person who applied for a license pursuant to this division.
(b) “California debtor accounts” means accounts that are owned by consumers who reside in California at the time that the consumer makes a payment on the account.
(c) “Collection agency” means a business entity through which a debt collector or an association of debt collectors engage in debt collection. The term “collection agency” includes a business entity that acts as a broker, forwarder, intermediary, or middleman that sends or refers repossession assignments or repossession orders to repossession agencies or repossession agents in California.
(d) “Commissioner” means the Commissioner of Business Oversight.
(e) “Consumer credit transaction” means a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes.
(f) “Consumer debt” or “consumer credit” means money, property, or their equivalent, due or owing, or alleged to be due or owing, from a natural person by reason of a consumer credit transaction. The term “consumer debt” includes a mortgage debt. The term “consumer debt” includes “charged-off consumer debt” as defined in Section 1788.50 of the Civil Code.
(g) “Creditor” means a person who extends consumer credit to a debtor.
(h) “Debt” means money, property, or their equivalent that is due or owning or alleged to be due or owing from a natural person to another person.
(i) “Debt collection” means any act or practice in connection with the collection of consumer debt.
(j) “Debt collector” means any person who, in the ordinary course of business, regularly, on the person’s own behalf or on behalf of others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters and other collection media used or intended to be used for debt collection. The term “debt collector” includes “debt buyer” as defined in Section 1788.50 of the Civil Code.
(k) “Debtor” means a natural person from whom a debt collector seeks to collect a consumer debt that is due or owing or alleged to be due or owing from the person.
(l) “Department” means the Department of Business Oversight.
(m) “Fund” means the Debt Collection Licensing Fund established pursuant to Section 100006.5.
(n) “Licensee” means a person licensed pursuant to this chapter.
(o) “Nationwide Multistate Licensing System & Registry” means a system of record, created by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, for nondepository, financial services licensing or registration in participating state agencies, the District of Columbia, Puerto Rico, the United States Virgin Islands, and Guam.
(p) “Person” means a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity.

 

SEC. 2.

Section 100006.5 of the Financial Code is amended to read:

 

100006.5.

(a) The Debt Collection Licensing Fund is hereby established within the state treasury.

(b) All licensing fees collected shall be deposited into the Fees Account which is hereby established within the fund.
(c) All fines and penalties collected shall be deposited into the Penalties Account which is hereby established within the fund.
(d) All monies deposited into the fund shall be available to the commissioner, upon appropriation by the Legislation, Legislature, for the purposes of this division.

 

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

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