An act to amend, repeal, and add Sections 1789.11, 1789.12, 1789.13, 1789.14, 1789.15, 1789.16, 1789.19, 1789.21, and 1789.25 of, and to add Sections 1789.11.1, 1289.11.3, 1789.11.5, 1789.12.1, 1789.12.3, 1789.12.5, 1789.12.7, 1789.12.9, 1789.12.11, 1789.12.13, 1789.12.15, 1789.12.17, 1789.12.19, 1789.12.21, 1789.12.23, 1789.12.25, 1789.12.27, 1789.12.29, 1789.12.31, 1789.12.33, 1789.12.35, 1789.12.37, 1789.12.39, 1789.12.41, 1789.12.43, 1789.12.45, 1789.134, and 1789.135 to, the Civil Code, relating to consumer credit.
Existing law, the Credit Services Act of 1984, defines and regulates the activities of credit services organizations. Existing law generally defines a credit services organization as a person who, for payment, performs specified credit-related services, such as improving a buyer’s credit record and obtaining loans. Existing law requires credit services organizations to obtain a surety bond, as specified, before conducting business and requires that they register with the Department of Justice, subject to a fee of $100.
Existing law requires that credit services be provided pursuant to a written contract, which is required to contain specified provisions, and requires the credit services organization to provide a prescribed information statement before the execution of the contract. Existing law requires the contract to contain a notice informing the buyer that the contract can be canceled within 5 days from the date the contract is signed. Existing law prohibits, among other things, a credit services organization from receiving money before full and complete performance of the service the organization has agreed to perform and prohibits failing to perform the agreed-upon services within 6 months. Existing law makes a violation of these provisions a misdemeanor.
Existing law authorizes a buyer of services who is injured by a credit services organization’s violation of the act, or its breach of contract, to bring an action for damages or injunctive relief, as specified. Existing law also authorizes any person, including a consumer credit reporting agency, to bring an action, as specified, for a violation of these provisions.
This bill would revise and recast these provisions to, instead, require the Department of Financial Protection and Innovation, commencing on January 1, 2023, to license, regulate, and oversee credit services organizations. The bill would, beginning on January 1, 2022, require the department to take all action necessary in order to be prepared to perform these duties commencing January 1, 2023, including, but not limited to, the adoption of necessary regulations. The bill would prohibit the public disclosure of specific information provided by a licensee to the department.
This bill would prohibit a person from engaging in credit services in this state without a license and would also require the person to comply with specified requirements, and the reporting, examination, and other oversight requirements issued or mandated by the department. 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 , perjury, and submit to a criminal background check by the department. By expanding the scope of the crime of perjury this bill would impose a state-mandated local program.
This bill would require each licensee to, among other things, file reports with the Commissioner of the Department of Financial Protection and Innovation under oath, maintain a surety bond, and pay to the department its pro rata share of all costs and expenses reasonably incurred in the administration of these provisions, as estimated by the department. The bill would authorize the department to enforce these provisions by, among other things, adopting regulations, performing investigations, suspending or revoking a license, issuing orders and claims for relief, and enforcing the provisions, as specified.
The bill would revise information that must be provided to a consumer before a credit service contract is executed, including a notice regarding the filing of complaints with the department and would require the Attorney General and the department to maintain an internet website for this purpose.
This bill would replace the term “buyer” with the term “consumer” for purposes of describing a person utilizing the services of a credit services organization and would prescribe other definitions in this regard. The bill would require a credit services organization to provide a consumer an itemized a monthly statement showing each service performed for a consumer, as specified, and would require the organization to perform services agreed upon within 180 days of contracting for those services. The bill would require the information statement and contract to inform the consumer that the contract can be canceled before midnight on the 5th working day after execution of the document it.
This bill would extend prohibitions on counseling a consumer to make untrue statements to other specified parties. Among other things, the bill would prohibit a credit services organization from impersonating a consumer and failing to identify communications as originating from the organization, from submitting a dispute to a consumer credit reporting agency, creditor, debt collector, or debt buyer more than 180 days after the disputed account has been removed, or from failing to provide along with its first written communication to a credit reporting agency or data furnisher sufficient information to investigate a dispute of an account. The bill would require a consumer credit reporting agency, creditor, debt collector, or debt buyer that knows that a consumer is represented by a credit services organization to communicate with the credit services organization, except as specified.
This bill would require a credit services organization to redact specified information in certain written communications. The bill would require a credit services organization to maintain certain information on file for 4 years. The bill would require the department to maintain an internet website, as specified. The bill would prescribe statutory penalties that may be imposed on a credit services organization that willfully and knowingly violates these provisions. Because the bill would change the definition of a crime, the bill would impose a state-mandated local program. The bill would authorize the department to periodically increase the amount of the fee it is authorized to charge for licensure, regulation, and oversight of licensees, but the amount of the fee would be prohibited from exceeding that which is reasonable and necessary to satisfy the department’s costs in complying with its duties to license, regulate, and oversee licensees.. licensees. The bill would create the Credit Repair Services Licensing Fund, the monies in which shall be available to the department upon appropriation by the Legislature.
This bill would require a consumer credit reporting agency, creditor, debt collector, or debt buyer that knows that a consumer is represented by a credit service organization, and that also has knowledge of, or can readily ascertain the credit services organization’s name and address, to communicate with the credit services organization, except as specified.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.