In recent years, commercial debt collection companies across the country have developed an understanding of what they can and cannot do in their collection practices on account of the Fair Debt Collection Practices Act (FDCPA).

However, the FDCPA only applies to debt collection agencies, so creditors who are attempting to collect outstanding debts for themselves typically fall outside of its reach. But that is not the case in the state of California as a result of the Rosenthal Act.

Definition of a Debt Collector

The Rosenthal Act is a piece of legislation that protects consumers in the state of California by expanding the definition of a “debt collector” to include any creditor who is attempting to collect a consumer debt from someone in that state. This includes all of those first-party debt issuers who are attempting to track down their delinquent customers.

While we always recommend that anyone attempting to contact a debtor should follow the regulations established by the FDCPA, the state of California has gone one step further and made it an actual requirement.

The Two Big Exceptions

There are two aspects of the FDCPA that are specifically noted as exceptions in the Rosenthal Act.

Creditors who don’t meet the definition of a “debt collector” according to the FDCPA don’t have to provide consumers with a mini-Miranda notice. They can also abstain from sending consumers the validation notice specified in the FDCPA.

Phone Call Specifics

One area that the Rosenthal Act specifically focuses on is the phone calls that creditors make to debtors. The law states that all creditors are prohibited from making repeated phone calls to a debtor in an attempt to aggravate them.

No matter what type of debt collector we are talking about, it is always a good practice to keep a log of all communication attempts so that you can prove that you respected the debtor’s privacy while attempting to contact them.

Once Attorneys Get Involved

Another specific detail noted in the Rosenthal Act is that all creditors must immediately cease any attempt to contact the debtor directly once they receive written notice that the debtor has retained the services of an attorney.

In most cases, these creditors will have already obtained their own legal counsel, making this a non-issue. But the law is very clear that once a dispute hits the court system, all direct communication needs to end.

Possible Penalties

The Rosenthal Act also expands on the abilities for debtors to seek damages from debt collectors who violate these regulations. If the debtor is able to demonstrate that a debt collector willfully violated the Rosenthal act, they can pursue damages that range from $100 to $1,000 per violation.

In many cases, creditors attempting to collect their own debt will be protected from these penalties because they will not have willfully or purposefully have violated the Rosenthal Act. However, we highly recommend that you stick to the letter of the law in all cases.

The Rosenthal Act was intended to expand on the protection that the FDCPA offers to consumers, but from the perspective of a creditor, it can add a whole new mess of rules and regulations to understand. As always, the best way to make sure that you are in compliance with all regulations is to partner with a commercial debt collection agency that has experience in those areas.