This title may be cited as the Rosenthal Fair Debt Collection Practices Act.
Fair Debt Collection PracticesGeneral Provisions
Section § 1788
This law can be called the Rosenthal Fair Debt Collection Practices Act, which sets rules for fair and respectful treatment of consumers by debt collectors.
Rosenthal Act debt collection consumer protection
Section § 1788.1
This law emphasizes the importance of fair and honest practices in debt collection to maintain public trust in the banking and credit systems. It aims to prevent unfair methods by debt collectors when retrieving debts from consumers and small businesses. The law requires both debt collectors and debtors to respect each other’s rights while managing debts. It clarifies that it does not impose extra licensing for debt collectors concerning certain commercial debts. Additionally, the parts of this law about commercial credit and debt take effect for agreements made from July 1, 2025, onward.
(a)CA Civil Law Code § 1788.1(a) The Legislature makes the following findings:
(1)CA Civil Law Code § 1788.1(a)(1) The banking and credit system and grantors of credit to consumers are dependent upon the collection of just and owing debts. Unfair or deceptive collection practices undermine the public confidence, which is essential to the continued functioning of the banking and credit system and sound extensions of credit to consumers and small businesses.
(2)CA Civil Law Code § 1788.1(a)(2) There is need to ensure that debt collectors and debtors exercise their responsibilities to one another with fairness, honesty and due regard for the rights of the other.
(b)CA Civil Law Code § 1788.1(b) It is the purpose of this title to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and small business debts and to require debtors to act fairly in entering into and honoring those debts, as specified in this title.
(c)CA Civil Law Code § 1788.1(c) Nothing in this title is intended to create or impose an additional licensing requirement under Division 25 (commencing with Section 100000) of the Financial Code on a debt collector with respect to the collection of covered commercial debt or covered commercial credit.
(d)CA Civil Law Code § 1788.1(d) The provisions of this title related to covered commercial credit or covered commercial debt
apply to covered commercial credit or covered commercial debt entered into, renewed, sold, or assigned on or after July 1, 2025.
debt collectors unfair practices deceptive practices
Section § 1788.2
This section explains the key terms used in laws about debt collection. It defines what debt collection is, and who qualifies as a debt collector. It explains that a 'debt' can be money or property owed by one person to another. A 'consumer credit transaction' is when someone buys something on credit for personal use. The law also describes terms like 'debtor', 'creditor', and 'consumer credit report'. It explains what 'covered debts' and 'covered credit' are, including the rules about how much can be owed under covered commercial credit transactions, which must not exceed $500,000.
(a)CA Civil Law Code § 1788.2(a) Definitions and rules of construction set forth in this section are applicable for the purpose of this title.
(b)CA Civil Law Code § 1788.2(b) The term “debt collection” means any act or practice in connection with the collection of covered debts.
(c)CA Civil Law Code § 1788.2(c) The term “debt collector” means any person who, in the ordinary course of business, regularly, on behalf of that person or 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.
(d)CA Civil Law Code § 1788.2(d) The
term “debt” means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person.
(e)CA Civil Law Code § 1788.2(e) The term “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)CA Civil Law Code § 1788.2(f) The terms “consumer debt” and “consumer credit” mean 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.
(g)CA Civil Law Code § 1788.2(g) The term “person” means a natural person,
partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity.
(h)Copy CA Civil Law Code § 1788.2(h)
(1)Copy CA Civil Law Code § 1788.2(h)(1) Except as provided in Section 1788.18, the term “debtor” means a natural person from whom a debt collector seeks to collect a covered debt that is due and owing or alleged to be due and owing from that person.
(2)CA Civil Law Code § 1788.2(h)(2) In relation to a covered commercial debt or covered commercial credit, a “debtor” shall mean a natural person who guarantees an obligation related to a covered commercial credit transaction.
(i)CA Civil Law Code § 1788.2(i) The term “creditor” means a person who extends covered credit to a debtor.
(j)CA Civil Law Code § 1788.2(j) The term
“consumer credit report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (1) credit or insurance to be used primarily for personal, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under any applicable federal or state law or regulation. The term does not include (a) any report containing information solely as to transactions or experiences between the consumer and the person making the report; (b) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit
card or similar device; or (c) any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys that person’s decision with respect to that request, if the third party advises the consumer of the name and address of the person to whom the request was made, and the person makes the disclosures to the consumer required under any applicable federal or state law or regulation.
(k)CA Civil Law Code § 1788.2(k) The term “consumer reporting agency” means any person that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer credit reports to third parties and uses any means or facility for the purpose
of preparing or furnishing consumer credit reports.
(l)CA Civil Law Code § 1788.2(l) The term “covered debt” means a consumer debt or a covered commercial debt.
(m)CA Civil Law Code § 1788.2(m) The term “covered credit” means consumer credit or covered commercial credit.
(n)CA Civil Law Code § 1788.2(n) The terms “covered commercial debt” and “covered commercial credit” mean money due or owing or alleged to be due or owing from a natural person to a lender, a commercial financing provider, as defined in Section 22800 of the Financial Code, or a debt buyer, as defined in Section 1788.50,
by reason of one or more covered commercial credit transactions, provided the total amount of all covered commercial credit transactions and all other noncovered commercial credit transactions due and owing by the debtor or other person obligated under the transactions to the same lender, commercial financing provider, or debt buyer is no more than five hundred thousand dollars ($500,000).
(1)CA Civil Law Code § 1788.2(n)(1) For credit owed to a lender or commercial financing provider, the total value
of credit per transaction is determined as of when the transaction is first entered into and is the maximum amount that the creditor is contractually required to provide or make available to the debtor over the life of the transaction or is the maximum amount that is enumerated in an open-end credit agreement.
(2)CA Civil Law Code § 1788.2(n)(2) The value of credit for each transaction for a debt buyer is the amount owing or alleged to be owing to the debt buyer when the debt buyer acquires the rights of the lender or commercial financing provider in the commercial credit.
(o)CA Civil Law Code § 1788.2(o) The term “covered commercial credit transaction” means a transaction between a person and another person in which
a total value of no more than five hundred thousand dollars ($500,000), is acquired on credit by that person from the other person for use primarily for other than personal, family, or household purposes.
debt collection debt collector consumer credit transaction
Section § 1788.3
This law makes it clear that credit unions can share information with certain people involved with the credit union, like employees or officers, if they need to know it as part of their roles. This doesn't break any rules in this title.
Nothing contained in this title shall be construed to prohibit a credit union chartered under Division 5 (commencing with Section 14000) of the Financial Code or under the Federal Credit Union Act (Chapter 14 (commencing with Section 1751) of Title 12 of the United States Code) from providing information to an employer when the employer is ordinarily and necessarily entitled to receive such information because he is an employee, officer, committee member, or agent of such credit union.
credit union information sharing employee rights
