A few weeks ago, we took a look at the importance of respecting the Fair Debt Collection Practices Act (FDCPA). If you are attempting to collect debts in the state of California, you also need to be aware of the California Fair Debt Collection Practices Act (CFDCPA), which has also been referred to as the Rosenthal Fair Debt Collection Practices Act.
The main difference between the federal Fair Debt Collection Practices Act and the California Fair Debt Collection Practices Act is that the state of California extents the protections offered in the FDCPA to its citizens from more than just collections agencies. The CFDCPA also requires original creditors, attorneys who collect debts, bill collection services, and anyone else who collects debts as a form of business to comply with their regulations.
Because of the more open definition of a debt collector in California, just about anyone collecting a debt should follow the regulations set forth by the CFDCPA. Some of the practices prohibited by the act include:
It is not legal in California to threaten physical violence against a debtor. It is also forbidden to accuse a debtor of committing a crime, making false statements about a debtor, or threatening to publicly shame a debtor. You also cannot threaten to arrest a debtor, seize their assets, or garnish their wages, unless there are already plans in place to do so.
Inappropriately Communicate with Debtors
Debt collectors also must use caution when using the telephone. It is not acceptable to harass a debtor over the phone. You cannot call them repeatedly, or let the phone ring repeatedly for long periods of time. It is also not acceptable to use profane language on the phone. When calling a debtor, you must always identify yourself, and never misrepresent yourself.
Compromising Someone’s Privacy
The state of California takes a debtor’s right to privacy very seriously. It is illegal to discuss the debtor’s situation with their employer, friends, or family. A debt collector can only contact a debtor’s employer to verify employment, locate the debtor, verify health insurance, or garnish wages after obtaining a judgment. Debt collectors are not permitted to publish debtors’ names in the newspaper, and they must only send mail in plain envelopes.
If you are attempting to collect a debt either by phone or in person, you absolutely must identify yourself correctly from the outset of the conversation. No debt collector has the right to impersonate a police officer or lawyer. Any mail coming from a debt collector must also follow these guidelines.
As you can see, most of the restrictions imposed by the CFDCPA are very similar to the FDCPA. The key difference is that the restrictions are applied to a much broader group in California.
The added difficulty for original creditors to collect their debts in California makes them more likely to hire a California collection agency. Hiring a reputable agency to handle the collection process takes the burden of following the strict laws off of the creditor and places it on the agency. For many small business owners, this is well worth the cost.