In summary

Given the power debt collectors have, Californians need a law to hold the industry accountable and punish the bad actors.

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By Bob Wieckowski, Special to CalMatters

State Sen. Bob Wieckowski, a Democrat from Fremont, represents the 10th Senate District, He wrote this commentary for CalMatters.

Just a few months ago, California’s economy was humming along, fueled by a tech boom that sustained years of annual growth. Now, with millions of Californians out of work as a result of the COVID-19 pandemic, many people are wondering how they are going to pay the bills and avoid falling deeper into debt. 

In these uncertain times, it is more critical than ever that our state government step up and protect struggling families by approving Senate Bill 908, legislation to require the licensing of debt collectors in California.  Without greater oversight of this industry, which has a notorious reputation and a history of abusive practices, more families will be unnecessarily threatened or ripped off. 

This enforcement authority is long overdue.  While California has had laws on the books since 1977 covering fair debt collections practices, they do little to deter bad behavior because the onus is put on the consumer to enforce the law. That’s right.  The person who is being harassed and often wrongfully accused of owing a debt, must attempt to enforce the law herself by suing the debt collection company.  

Even for the few who can afford a lawyer to fight for their rights, it often is not worth the cost.  This allows unscrupulous debt collectors to get away with collecting on a debt already paid, inflating the amount owed or misrepresenting why they repeatedly called.  Many consumers simply give up.

A recent report by The Pew Charitable Trusts found that for jurisdictions where data are available more than 70% of lawsuits brought by debt collection companies end with default judgments for the collectors. As the phrase implies, the cases are issued by default without an examination of the facts or figures. 

Without a state licensing requirement and robust enforcement, the industry can continue its reckless behavior with no accountability. California has no idea how many debt collectors operate within the state, the sheer volume of debt they are collecting from Californians, or what qualifications these companies require of employees who manage thousands of accounts. 

SB 908 will add California to the list of 34 other states that require a license to collect on consumer debt. The state Department of Business Oversight would license and regulate the industry.  It would field complaints from borrowers, enforce violations of existing fair debt collection laws, taking that burden off the hands of consumers, and provide the public with a single location to see what companies are licensed and any actions taken against the collection company, including suspensions or revocations. 

SB 908 was already a sorely needed bill to regulate the industry. Americans held more than $13 trillion in debt before COVID-19 and the pandemic will surely increase those numbers. 

Despite California’s years of economic growth, income inequality is vast and the state has a highest-in-the-nation poverty rate. As unemployment soars, families will be forced to make agonizing financial decisions, which will undoubtedly include burdening themselves with more debt. 

Given the power debt collectors have to affect people’s bank accounts, personal property and credit scores, we need SB 908 now more than ever to hold the industry accountable and punish the bad actors who otherwise would prey on the vulnerable and desperate.

Californians have enough on their minds with staggering unemployment and a deadly pandemic. They should not have to deal with threats and abuses from lawless debt collectors.


State Sen. Bob Wieckowski, a Democrat from Fremont, represents the 10th Senate District, He wrote this commentary for CalMatters.

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