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California's Rosenthal Fair Debt Collection Practices Act Explained

Sarah Edwards | May 31, 2024

Sarah Edwards
Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: If you’re in California, you’re in luck — new debt collection protections might be headed your way. SoloSuit explains California’s new Rosenthal Fair Debt Collection Practices Act and how it can help you.

Not all debt collection agencies use dishonest tactics, but unfortunately, many do. The Fair Debt Collection Practices Act (FDCPA) is a law that protects your consumer rights at the federal level. However, some states — including California — have decided they need to give their citizens extra protection from deceptive and predatory debt collectors.

The California Senate Banking and Financial Institutions Committee is considering a piece of legislation called SB-1286 (a bill that would expand the protections offered by the Rosenthal Fair Debt Collection Practices Act to help small businesses). Here’s what you need to know.

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What is the current version of the Rosenthal Fair Debt Collection Practices Act?

California’s Rosenthal Fair Debt Collection Practices Act (RFDCPA) currently protects individual consumers. Here are some of the ways it expands the protections you have under federal law:

If the statute of limitations has expired, a collector has to tell you

Debt collectors are limited by a statute of limitations. This means that after a certain amount of time has passed, they don’t have a right to collect the debt. Unfortunately, plenty of people don’t know that, and collectors don’t want to tell them; they want them to pay up anyway.

The Rosenthal Act requires collectors to tell you the statute of limitations has expired in the first written communication they send after the expiration date.

When telling you about an expired statute of limitations, collectors must use certain language

Legal language can be difficult for the average person to understand. That’s why the Rosenthal Act requires a collector to send one of these notices word-for-word:

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”

If the statute of limitations has passed, a collector can’t sue you or try to start arbitration.

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Collectors must respect the judicial process

California debt collection laws require everyone to respect the judicial process. However, the Rosenthal Act adds some additional stipulations for collectors. If a collector wants to sue you for a debt, they are only allowed to do so in certain counties:

  • The county where you live now
  • The county where you lived when you incurred the debt
  • The county where you actually incurred the debt

In addition, if a collector sues you, it must legally serve you with a notice of a lawsuit. If you aren’t legally served and the collector gets a default judgment because you didn’t know about the lawsuit, it can’t legally collect the debt.

If you’re dealing with a debt lawsuit, check out SoloSuit’s short video for tips on how to negotiate with creditors and debt collectors to settle the debt and avoid court.

How would the amended law expand protections?

If it passes, the new California law would not change the existing protections you have under the law. In short, it would make it so the law protects some kinds of small businesses. These are some of the ways it would expand current law.

It would clarify “small business” and “small business credit transaction”

SB-1286 would clearly define what qualifies as a small business. To qualify, the business must:

  • Be owned and operated independently
  • Not be dominant in its field
  • Have its main office and its main executives and officers located in California
  • Have 100 employees or fewer (that includes employees of any of its affiliates)
  • Have average annual gross receipts over the last three years of $15 million or less

For the purposes of the law, a “small business credit transaction” is a transaction where the business or its owner gets services, funding, or property for the business on credit. For example, if you purchase office equipment on a business credit card, that would qualify as a small business credit transaction.

It would protect against identity theft

If you provide evidence that you or your business has been victimized by identity thieves, a collector can’t continue trying to collect.

It would protect you from misrepresentation

A collector must provide you or your business with certain kinds of information about a debt. It also may not use threats or harassment.

What can you do if a collector violates the Rosenthal Act?

You have recourse if you think a collector has violated the Rosenthal Act:

While the CFPB can’t pursue legal action on your behalf, it can often reach out to the collector to help resolve the issue. According to the CFPB website, most companies respond to complaints within 15 days.

To see how these options can help, let’s consider an example.

Example: Robert owns a small business called Robert’s Car Wash. Unfortunately, identity thieves took out a loan under his business’s name. Rude Collections Inc. is trying to collect. Robert sends documentation to prove the identity theft happened, but the company keeps trying to collect. He contacts the CFPB and sends the same documentation. The CFPB reaches out to Rude Collections Inc., and the collector agrees to drop the debt.


And note that there are other California debt collection laws that may protect you from unfair collection practices.

Further protections may be on the horizon

Starting and managing a small business can be financially and logistically challenging. If the California debt collection new law is successfully amended, it may be able to help you succeed as a business owner and protect you from predatory collectors.

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