CA Expands Debt Collection Law to Include Certain Commercial Debts

California has amended its Rosenthal Fair Debt Collection Practices Act so that many of the Act’s provisions governing debt collection procedures now cover certain commercial (or business purpose) debts.  The amendment defines commercial debts that will be covered as money that a natural person owes (or allegedly owes) to a lender, a commercial financing provider, or a debt buyer that results from a transaction in which that person acquires no more than $500,000 on credit primarily for use other than personal, family, or household purposes.

Effective July 1, 2025, the Act will do the following (subject to some exceptions) with respect to covered commercial debts:

• Prohibit a debt collector from engaging in unfair or deceptive acts or practices;

• Require a debt collector that is assigned delinquent debt, on the debtor’s written request, to inform the debtor of certain information about the debt;

• Prohibit a debt collector from collecting or attempting to collect a debt (except if it was reduced to judgment) through judicial proceedings in a county other than the county in which the debtor incurred the debt or the county in which the debtor resided at the time that the debt collector commenced the proceedings;

• Criminalize the act of a debt collector, creditor, or an attorney sending a communication that simulates legal or judicial process ­­(or that gives the appearance of being authorized, issued, or approved by a governmental agency or attorney) when it was not authorized by any such attorney or governmental entity;

• Require that a debt collector stop collecting a debt when the alleged debtor presents the debt collector with certain information, such as information showing that the alleged debtor was a victim of identity theft; and

• Require that a person engaging in the business of debt collection obtain a license.