Contributors

Christian Scali

Founder and Managing Shareholder

Due to the pandemic, the California legislature paired down the laws it adopted in 2020. It nonetheless adopted key laws that may have a wide ranging effect on businesses in California. In addition, 2020 was an election year, and the voters of California chose to expand the reach of the California Consumer Privacy Act.

AB 908 - Debt Collection Licensing Act

What the law currently requires

California does not currently license debt collectors. The Attorney General and District Attorneys may enforce consumer protection laws

How this bill changes the law

This bill would enact the Debt Collection Licensing Act which would, beginning on January 1, 2022, provide for licensure, regulation, and oversight of debt collectors by the commissioner, define terms for its purposes, and make other conforming changes. The bill would prohibit a person from engaging in the business of debt collecting in this state without a license and would also require the person to comply with reporting, examination, and other oversight by the commissioner.

The bill would require a person applying for a license to, among other things, pay an application fee, sign the application under penalty of perjury, and submit to a criminal background check by the Department of Justice. It would also require each licensee to file reports with the commissioner under oath, maintain a surety bond, and pay to the commissioner its pro rata share of all costs and expenses reasonably incurred in the administration of these provisions, as estimated by the commissioner.

This bill would authorize the commissioner to use the authority to issue orders and claims for relief in connection with a violation of the Rosenthal Fair Debt Collection Practices Act or provisions regulating debt buyers, by insured depository institutions and persons who are licensed and regulated pursuant to various provisions of law, including the California Financing Law, the California Residential Mortgage Lending Act, and the Real Estate Law, as specified. These duties will commence on January 1, 2022.

Finally, the bill would establish the Debt Collection Advisory Committee, consisting of 7 members appointed by the commissioner, within the Department of Business Oversight to advise the commissioner on matters relating to debt collection, as specified.

AB 1864 – Department of Financial Protection and Innovation

What the law currently requires

California currently has a Department of Business Oversight that performs some consumer protection functions for the state. It also has a number of consumer financial protection laws.

How this bill changes the law

This bill would rename the “Department of Business Oversight” as the “Department of Financial Protection and Innovation,” and would be charge it with execution of consumer protection laws. The bill would also put this department in charge of various other laws relating to providing financial products and services in this state.

This bill also enacts the California Consumer Financial Protection Law (CCFPL) to strengthen consumer protections by expanding the ability of the department to improve accountability and transparency in the California financial system and promote nondiscriminatory access to responsible, affordable credit, among other purposes. The bill would require the department to regulate the provision of various consumer financial products or services and to exercise nonexclusive oversight and enforcement authority under California consumer financial laws and, to the extent permissible, under the federal consumer financial laws. The bill would also make it unlawful for covered persons or service providers, as defined, to, among other acts, engage in unlawful, unfair, deceptive, or abusive acts or practices with respect to consumer financial products or services, or offer or provide a consumer a financial product or service that is not in conformity with any consumer financial law.

The bill would grant the department, among other duties, the power to bring administrative and civil actions, issue subpoenas, promulgate regulations, hold hearings, issue publications, conduct investigations, and implement outreach and education programs. The bill would also require the department to promulgate specified regulations and to promulgate rules regarding registration requirements applicable to a covered person within certain timeframes and subject to specified conditions.

Many commentators have described this as a mini version of the federal Consumer Financial Protection Bureau (CFPB), in that it is intended to consolidate enforcement of consumer protection laws into one department. As with the CFPB, dealers may not be the direct target of enforcement or regulatory actions, though they are likely to be affected by rulemaking and enforcement against other related entities.

Proposition 24

California voters have approved Proposition 24, which will expand the reach and enforcement of the already groundbreaking California Consumer Privacy Act. For California businesses already struggling to comply with the CCPA, this means that there is even more work ahead. The Proposition expands consumer rights under the CCPA, while also increasing the likely enforcement of consumer privacy rights. In addition, these new requirements will demand a more active approach to CCPA compliance; to the extent a business is currently relying on a cookie-cutter compliance program, it will need to make dramatic and tailored changes to comply with the new law.

What the law currently requires

The CCPA was passed in 2018 and requires many California businesses to notify customers regarding their data collection practices. It is a wide ranging law that provides three basic rights to consumers: 1) the right to know what information is collected about them, 2) the right to request that businesses delete information held about the customer, with exceptions, and 3) the right to prevent the “sale” of the consumer’s information.

How this proposition changes the law

Proposition 24 requires qualifying businesses to do all of the following:

• honor customer’s requests not to share personal information
• provide consumers with an opt-out option for having their sensitive personal information, as defined in law, used or disclosed for advertising or marketing
• obtain permission before collecting data from consumers who are younger than 16
• obtain permission from a parent or guardian before collecting data from consumers who are younger than 13
• correct a consumer's inaccurate personal information upon the consumer's request

In addition, Proposition 24 establishes the California Privacy Protection Agency that would have the administrative power, authority, and jurisdiction to implement and enforce the consumer privacy laws. Currently only the California Attorney General has this authority, and the 2018 CCPA did not provide any additional funding for the AG’s office to carry out this authority.

The new Agency would be governed by a five-member board, with the chair appointed by the governor. The remaining four members would be appointed by the governor, attorney general, Senate Rules Committee, and speaker of the assembly. Proposition 24 will require the legislature to appropriate $10,000 million to the CCPA during each fiscal year.