Bill to license debt collectors, author says attorneys won’t take cases

A California legislator has introduced a bill to license debt collectors because, he said Monday, few borrowers file civil actions to enforce their rights and few attorneys want to take these cases.

Under SB 908, the state's Department of Business Oversight would enforce the terms of the Rosenthal Fair Debt Collections Practices Act, which was passed in 1977 to prevent "deceptive, dishonest, and unreasonable debt collection practices."

"California licenses everyone from mattress renovators to barbers and cosmetologists. Yet debt collectors, who can wreak havoc on a consumer's finances, are not licensed," the bill's author, state Sen. Bob Wieckowski, D-Fremont, said in a press release Monday. He introduced the bill Friday.

The industry generated more than 400,000 complaints in California between 2011 and 2018 with the top complaint being companies were seeking to collect debts consumers said they did not owe, his press release said. The senator's office noted most states licensed debt collectors, and California did as well between 1927 and 1992, until the Legislature allowed the regulation to lapse.

An attorney, Wieckowski has introduced several bills during his time in office to regulate the industry. Last year, Gov. Gavin Newsom signed his SB 616, which prevents debt collectors from taking the last $1,724 in a debtor's bank account, in order to prevent them from becoming destitute.

-- Malcolm Maclachlan