BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Joseph L. Dunn, Chair
2005-2006 Regular Session
AB 2781 A
Assembly Member Leno B
As Amended June 22, 2006
Hearing Date: June 27, 2006 2
Family Code 7
GMO:rm 8
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SUBJECT
Private Child Support Collectors
DESCRIPTION
This bill would require private child support collectors
(PCSCs), as defined, to comply with some basic consumer
protections to ensure that child support obligees have
clear information about the contract they are entering
into, have some basic rights to cancel the contract,
receive meaningful notice of collections made and the
amount of the collections kept by the private agency as its
fee, require PCSCs to follow the debt collection practices
that apply to collectors of other types of consumer debt,
and provide remedies when PCSCs do not comply with these
requirements.
BACKGROUND
In California and elsewhere, a burgeoning industry of
private child support collectors (PCSCs) has developed,
largely because governmental entities that collect child
support debt is continually hampered by budget and
personnel constraints. These PCSCs promise faster or more
complete results than the local child support agency can
provide. When these companies contract with child support
obligees, they have the obligees assign their rights to
arrearages and future support payments to the companies for
collection. In return, the companies pay any collected
amounts to the obligees, after subtracting their collection
(more)
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fees.
As the private child support collection business has grown,
complaints about private collectors have increased as well,
alleging excessive fees, false and deceptive advertising,
and failure to disclose important rights forfeited by child
support obligees when they assign these debts to private
companies.
In 2003, SB 339 (Alpert) was introduced to address these
complaints by regulating aspects of the private child
support collection business. Among other things, the bill
sought to protect obligees and obligors in the following
manner: 1) capping the amount of child support collections
PCSCs could retain as their own fee; 2) defining the type
of collections from which fees could be retained; 3)
requiring specified disclosures in advertisements and
solicitations; 4) setting forth provisions that must be
included in contracts; 5) defining the opportunities for
obligees to cancel a contract; 6) subjecting PCSCs to the
Rosenthal Fair Debt Collection Practices Act; 7) ensuring
that PCSCs could not take a percentage of collections
attributable to actions of the government child support
entity; 8) requiring PCSCs to send specified notices to the
support obligee, obligor, and the local child support
agency; and 9) prohibiting the PCSC from misrepresenting
itself, its rights, or the responsibilities of the obligor
or others to pay past due child support. SB 339 was vetoed
by the Governor, whose message was:
While I support ensuring parents are not taken
advantage of in securing child support payments, this
bill will have the effect of severely limiting a
consumer's choice to go to a private collection
agency when government efforts to collect the owed
child support falter. ?I welcome many of the
provisions in this bill that would ensure families
are protected when they choose to contract with a
private agency; however the provisions such as
capping the amount a collection agency can charge and
prohibiting a person from contracting with a private
collection agency when they have received partial
payment in the last six months are particularly
onerous to the industry and to parents seeking
choices.
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Last year, SB 896 (Runner, 2005) was introduced to once
again try to institute some consumer protections for
support obligees while attending to the Governor's veto
message. That bill was sponsored by Supportkids, Inc.
SB 896 was heard and passed by this committee with
amendments. However, it was gutted and amended by the
author on May 18, 2006 before it was heard in the
Assembly Judiciary Committee. Many of the provisions in
SB 896 are now in AB 2781, as are more of the
protections contained in SB 339. Thus, AB 2781 attempts
to bridge the difference between SB 339 and SB 896, and
includes some more provisions addressing issues raised
by other interested parties.
CHANGES TO EXISTING LAW
1.Existing law governs the collection of child support by
local child support agencies. (Family Code Section 17000
et seq.) (All references are to the Family Code.)
This bill would require a PCSC to meet some basic
consumer protections in its dealings with the support
obligees in contracting for the collection of past due
child support. Among other things, this bill would:
a. Definition of PCSC: The bill would define a PCSC
as a person, corporation, attorney, or other
nongovernmental entity who is engaged by an obligee to
collect court-ordered child support for a fee or other
consideration. A PCSC does not include attorneys who
deal with ongoing child support issues in the course
of representing a client in a family law matter. A
PCSC does include a private nongovernmental attorney
whose business is substantially (at least 50% of time
spent or remuneration received) comprised of child
support collections. [Proposed Sec. 5610(a).]
b. Written contract requirements: The bill would
require contracts to be in 10-point type and disclose
all of the following: (1) the fees imposed by the
contract and an example of how they are calculated;
(2) the amount of fees to be charged set by the agency
and not set by state law; (3) the PCSC cannot charge
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fees on current support if the obligee received any
current child support during the six months preceding
the contract with the PCSC; (4) the nature of services
to be provided; (5) the expected duration of the
contract; (6) how the contract may be canceled; (7)
the address and other access information for the PCSC;
(8) that the PCSC is not a government entity, and
government child support agencies in California
provide services free of charge; (9) the PCSC collects
only money owed to the obligee and not support
assigned to the state or county due to the receipt of
CalWORKs or Temporary Aid to Needy Families (TANF);
(10) the PCSC will not take a fee from collections
that are primarily attributable to the actions of a
government entity or another and the PCSC is required
by law to refund any fees improperly retained; (11)
that the obligee may seek, or continue to use the
services of a government child support agency and the
PCSC will not require or request that the obligee
cease or refrain from engaging in those services; and
(12) the PCSC is required to keep and maintain case
records for four years and four months after the
expiration of the contract and prior to destruction or
disposal of those records the obligee may retrieve
portions of the records that are not confidential.
This bill also would provide the form of a statement
on the first page of the contract that details items
that the obligee understands and agrees to with
respect to the contract, including that the money to
be collected is owed to the obligee and not to the
state or county, that the child support to be
collected is not assigned to the state or county, and
that the obligee would inform the PCSC if the obligee
applies for benefits under CalWORKS or TANF.
This bill also would specify the form statement to be
placed immediately above the signature line on the
contract that details items that the obligee
understands and agrees to with respect to the
contract, including that the PCSC would charge a fee
for all current child support and arrears until the
entire amount is collected, that it could take years
for the collection, and if payment is colleced through
wage garnishment, that the amount received from the
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PCSC will not be the full amount of any periodic
court-ordered child support payment until the contract
terminates since PCSC fees are collected from the
periodic payments. (See Comment 3a.)
c. Notice of cancellation form: This bill would
require the PCSC to include a notice of cancellation
form with the contract to ensure that obligees
understand their rights to cancel and have an easy
form to accomplish this task. The notice (provided
verbatim in the bill) must be in the same size font as
the contract, and written in the same language.
d. Right to cancel a contract; termination of
contract: The bill would provide that the obligee has
the right to cancel a contract within 15 business days
of execution of the contract, or at the end of any
12-month period in which the amount of the child
support collected is less than 50% of the amount
scheduled to be paid under a payment plan, or at any
time if the PCSC commits a material breach of any
provision of the contract or a material violation of
any provision of the statute; that the contract
terminates automatically when the term expires or the
contracted amount is collected. (See Comment 3d.)
e. Effect of assignment to PCSC: This bill would
provide that an assignment to a PCSC is a voluntary
assignment for purposes of bankruptcy.
f. No fees for current support and refund of
improperly retained fees: This bill would provide
that a PCSC shall not charge fees on current support
if the obligee received any current child support
during the six months preceding execution of the
contract with the PCSC; and require a PCSC that
improperly retains fees from collections that are
primarily attributable to actions of a governmental
entity to refund all of those fees immediately upon
discovery or notice of the improper retention of fees.
[Proposed 5610 c (5).] (See Comment 3a.)
g. Information to be given to obligee: This bill
would require the PCSC to provide all of the following
information: (1) the amount of each collection, and
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the date it was received by the PCSC and sent by the
PCSC to the obligee; (2) the amount of payment sent to
the obligee and the amount and percentage of each
payment kept by the PCSC as its fee; (3) the name of
and other identifying information relating to any
obligor who made child support payments collected by
the PCSC; (4) the source of the payment and the
actions taken by the PCSC that resulted in the
payment. If this information is provided by telephone
or internet access, it shall be up to date. If
written, it shall be sent at least quarterly, and if
provided by other means, the information shall be
updated and made available at least monthly. [Proposed
Sec. 5610(d).]
h. Direct deposit account: This bill would require a
PCSC to establish a direct deposit account with the
state disbursement unit and within two business days
of the date of disbursement notify the The Department
of Child Support Services (DCSS) of the portion of
each collection that constitutes a fee. The notice to
DCSS shall be in electronic format. [Proposed Sec.
5610(d)(3).]
i. Recordkeeping: This bill would require the PCSC to
retain records for the duration of the contract plus a
period of four years and four months from the date of
the last child support payment collected by the PCSC
for the obligee. In addition to the information
required to be provided to the obligee (see paragraph
g above) the PCSC would be required to maintain
specified information such as a copy of the child
support order; all correspondence between the PCSC and
the obligee or obligor; and other pertinent
information. The PCSC would be required to safeguard
the information to prevent accidental disclosure of
confidential information pertaining to the obligee or
obligor and to allow access to nonconfidential
portions of the information to obligees and obligors.
1.Debt collection practices
Existing law , the Rosenthal Fair Debt Collection
Practices Act, prohibits debt collectors from engaging in
a variety of practices in collecting consumer debt.
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Among the practices prohibited are the following:
a. Communicating with the debtor with such frequency
as to be unreasonable and to constitute harassment to
the debtor.
b. Communicating to any person any list of debtors
which discloses the nature or existence of a consumer
debt, commonly known as "deadbeat lists."
c. Communicating with the debtor by means of a written
communication that displays or conveys any information
about the consumer debt or the debtor which is
intended both to be seen by any other person and also
to embarrass the debtor.
d. Making a false representation that any person is an
attorney.
e. Representing that any debt collector is vouched
for, bonded by, affiliated with, or is an
instrumentality, agent or official of the government.
f. Communicating directly with a debtor who is
represented by an attorney with respect to the
consumer debt.
g. Sending a communication which simulates legal or
judicial process. (Civil Code Section 1788.10 -
1788.16.)
Existing law defines its applicability to the collection
practices of consumer debt. Child support debt is not
included in that definition. (Civil Code Section
1788.2.)
This bill would prohibit a PCSC from engaging in debt
collection practices that are prohibited by the Rosenthal
Fair Debt Collection Practices Act.
This bill would prohibit a PCSC from misstating the
amount of the fee that may be lawfully paid to the PCSC
or the identity of the person who is obligated to pay the
fee.
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This bill would prohibit a PCSC from making a false
representation of the amount of child support to be
collected, or ask any party other than the obligor to pay
the child support obligation, unless that party is
legally responsible for the debt or is the legal
representative of the obligor. The PCSC is not in
violation of this prohibition if it reasonably relies on
information provided by the government entity, a court
order, the obligee, or the obligor as to the amount of
the obligation due and owing.
This bill would prohibit a PCSC from requiring, as a
condition of providing services to the obligee, that the
obligee waive any existing right or procedure to pursue
a civil action, or that the obligee agree to resolve
disputes in a jurisdiction other than California or to
the application of laws other than those of California.
Any waiver must be knowing, voluntary and not made a
condition of doing business with the PCSC. Any waiver,
including an agreement to arbitrate or to choice of
forum, shall be deemed unconscionable, involuntary,
against public policy, and unenforceable.
1.Remedies
Existing law authorizes the following remedies for
violation of the Rosenthal Fair Debt Collection Practices
Act:
Accordingly, this bill would provide similar remedies to
the obligee or the obligor, as modified:
a. It would permit an action for actual damages
resulting from a violation.
b. In addition, a PCSC would be liable for a civil
penalty of no less than $100 nor more than $1,000 if
the PCSC willfully and knowingly violates the
provisions of the Act.
c. Costs would be awarded to the prevailing party.
Reasonable attorney's fees based on the time
necessarily expended to enforce the liability may be
awarded to a prevailing party, other than the PCSC,
asserting rights. Reasonable attorney's fees may be
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awarded to a prevailing PCSC if the court finds that
the party bringing the action did not prosecute the
action in good faith.
d. In an action by an obligor, the PCSC shall have no
civil liability to the obligor under any circumstance
in which a debt collector would not have any liability
under Sec. 1788.30 of the Civil Code.
e. A PCSC would not be in violation of this Act if the
PCSC shows by preponderance of the evidence that the
action complained of was unintentional and resulted
from a bona fide error that occurred notwithstanding
reasonable procedures to avoid the error.
f. These remedies are cumulative and in addition to
other remedies, rights, or procedures available under
any law.
4. Other provisions
a. Obligor to pay half the PCSC fee and other costs
ordered by court
This bill would provide that every child support order
issued on or after January 1, 2008 and every child
support agreement approved by a court on or after
January 1, 2008 shall include a separate money
judgment owed by the child support obligor to pay
one-half of the fee charged by a PCSC pursuant to a
contract compliant with this Act and any other child
support collections costs expressly permitted by the
child support order.
This bill would provide that the money judgment
described above shall be in favor of the PCSC and the
child support obligee, jointly, and that the PCSC may
enforce the obligation to pay the fee by any means
available to the obligee for the enforcement of the
child support order without any additional action or
order by the court. Any fee (as well as any other
fees and costs ordered by the court) thus collected
from the obligor by the PCSC pursuant to a compliant
contract would not constitute child support.
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This bill would not grant the PCSC any enforcement
remedies beyond those authorized by federal or state
law.
This bill would require the PCSC, if the court order
includes other fees and costs by the obligor, to
provide the obligor written notice, no later than five
days after the PCSC makes the first collection, of the
following: (1) the amount of arrearages subject to
collection; (2) the amount of the collection that will
be applied to the arrearage; and (3) the amount of the
collection that will be applied to the fees and costs
of collection. The PCSC would be required to include
notice that the obligor has 30 days to file a motion
to contest the amount of the collection fees and costs
assessed against the obligor and the amount of the
arrearages subject to collection.
b. Attorneys acting as PCSCs
This bill would require an attorney acting as a PCSC
to conform to statutes, rules and case law governing
attorney conduct, including the right of the client to
cancel a contract at any time.
This bill would allow the attorney to pursue normal
remedies, including reasonable payment for services
rendered under the doctrine of quantum meruit,
provided those services led to the collection of
support.
c. Lien on real property
This bill would specify that any fees or monetary
obligations resulting from a compliant contract
between an obligee parent and a PCSC, or any money
owed to a PCSC by an obligor parent as a result of the
PCSC's efforts does not without further action create
a lien on real property nor may that amount be added
to any existing lien created by a recorded abstract of
support or be added to an obligation on any abstract
of judgment.
This bill would however not prevent the PCSC from
collecting fees it is owed by recording a new judgment
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lien as otherwise authorized by law.
d. Notice to local child support agency
This bill would require the PCSC with whom an obligee
contracts for the collection of child support to
provide written notice to the local child support
agency then enforcing the obligee's support order, or
the local child support agency for the county in which
the obligee resides, prior to commencement of
collection activities. The notice shall identify the
obligee and the amount of the arrearage claimed by the
obligee.
COMMENT
1. Need for the bill
AB 2781 is sponsored jointly by the Children's Advocacy
Institute (CAI) and the National Center for Youth Law
(NCYL). In describing the need for this bill, the CAI
states:
Child support is intended to provide economic
stability for the child. In many cases these
payments significantly contribute to a family's
income, which protects children from the
devastation of poverty?When the established
[child support] collection process disappoints,
some families have turned to unregulated private
child support collectors. Unfortunately, there
have been instances when these private child
support collectors have taken advantage of
families desperate to collect their support?This
bill will create a framework to protect families
from unscrupulous collection practices and will
protect children.
The NCYL focuses more on specific unfair practices used
by PCSCs in contracting with obligees:
These private child support collectors (PCSCs)
have emerged out of a self-stated need to assist
parents who have not been successful in
collecting child support from noncustodial
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parents. By in[sic] large these private child
support collectors are unregulated in California.
Unsuspecting parents often get pulled into
perpetual contracts that end up resulting in more
of any collections going to the collectors than
children. The fact that many parents are so
desperate to collect child support arrears often
leaves them vulnerable to some unscrupulous
collectors and practices.
2. Industry practices demonstrate the need to install
some basic consumer protections
In a 2002 study, the U.S. General Accounting Office
("GAO," now known as the Government Accountability
Office) identified 38 private firms in 16 states that
were regularly engaged in the business of collecting
child support. (GAO 02-349, Child Support Enforcement:
Clear Guidance Would Help Ensure Proper Access to
Information and Use of Wage Withholding by Private Firms,
March 2002.) Some project that since the GAO report was
issued, the industry has grown considerably in size.
(Center for Law and Social Policy [CLASP], Private Child
Support Collection Agencies, April 2005.) The growth of
the private child support collection industry has also
meant greater attention has been paid to its practices in
the recent past. CLASP reports that "over the last
decade, an unregulated industry has grown rapidly,
primarily around the internet, to aggressively and
sometimes deceptively market child support collection
services." These companies, CLASP reports, "often fail
to deliver any genuine services . . . and trap [support
obligees] in perpetual contracts."
The GAO and CLASP Reports note that on average, these
PCSCs charge custodial parents 29 percent of the support
that is collected, and some of the largest companies take
34 percent of the collection. Additionally, many of
these companies charge clients an application fee,
averaging at about $95, and also charge clients other
costs or fees for taking particular enforcement actions.
CLASP notes that the "GAO found that the main edge held
by private companies in enforcing support is that the
companies pressure relatives to pay the support owed . .
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. and use collection tactics that are prohibited to state
child support agencies, private attorneys, and private
collection agencies that pursue consumer debt." Much of
CLASP's view is a result of the roughly 400 complaints
against PCSCs it has received and reviewed. CLASP points
to four practices that it believes typify the type of
activity that needs regulation: "(1) promising help with
back support, but instead pocketing a fee from ongoing
monthly support; (2) taking a cut of support collected by
state child support agencies; (3) demanding payments from
grandparents; and (4) coercing payments from
non-custodial parents that are not owed or authorized by
state law." CLASP concludes that "the complaints reflect
an offensive and disturbing picture of deceptive
advertising, misleading contracts, fee gouging,
harassment and abuse, posing as the government, dunning
grandparents, inflating and fabricating debts,
undermining credit worthiness, and abusing legal
process."
Case law and recent press have also illustrated the
prevalence of these practices. In one instance reported
by Time magazine (August 29, 2002), an Arizona-based PCSC
collected a total of $1,100 after five months' work, took
$885 in fees, and left the custodial parent with the
remaining $215. The Time article also reported that a
Texas PCSC directed obligors' employers to re-direct wage
garnishment payments to the PCSC, even when the PCSC
played no role in the garnishment. Another troubling
practice alluded to by CLASP was the subject of a
lawsuit. The court decision in Reno v. Supportkids, Inc.
(2004) U.S. Dist. Lexis 6459, described a practice where
the obligee, in contracting with the PCSC, indicated the
amount of child support due and owing was $13,589. The
PCSC communicated to the obligor that he owed $120,000,
and filed a lien against his home in the amount of
$122,474. Although the court decision centered around
the appropriate remedies available, this underlying fact
does not appear to have been contested (and the
defendants acknowledged the evidence that they filed a
lien in an inflated amount). In fact, the court noted
that the defendants did not remove the lien until one and
one-half years after the complaint was filed.
CLASP comments that "although there may be an appropriate
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role for private child support collection companies that
are committed to customer service, use legitimate
collection practices, and help parents obtain overdue
child support that they might not otherwise receive, the
industry currently operates without regulatory controls."
3. AB 2781 would remedy many of the problems encountered
today
This bill would remedy many, though certainly not all, of
these concerns.
a. Written contracts would spell out many consumer
protections
The most important provision in this bill is the
requirement that a written contract between the PCSC
and the obligee contain specific disclosures that
spell out the obligee's rights and the PCSC's
obligations. These disclosures will at least help
obligees make fully informed decisions when entering
into a contract with a PCSC.
By ensuring that the contract explains all of the fees
that will be taken by the PCSC, notifying obligees
that government agencies provide similar services free
of charge, informing obligees of their right to keep
their cases open with government child support
agencies, limiting the authority of PCSCs to take as
their fee a share of collections that was attributable
to the work of others, and giving obligees the right
to get out of the contract if the PCSC breaches the
contract or violates this statute, this bill evens the
playing field considerably. The bill thus gives
obligees more information to arm themselves with when
dealing with a PCSC.
Although AB 2781 would not limit the fees that PCSCs
can take, it requires disclosure so that obligees are
more able to determine if they are willing to pay that
much of their support collections to the PCSC or risk
that they will get less if they do not engage the
services of the PCSC.
In addition, AB 2781 contains a provision that
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requires the contract between the PCSC and the obligee
to state, up front, that fees are not set by state law
but by the PCSC and that the PCSC will not retain fees
from collections attributable to actions by other
entities and is required by law to refund those fees
improperly retained.
Under this bill, the written contract must contain a
statement that the PCSC cannot charge fees on current
support if the obligee received any current child
support during the six months preceding execution of
the contract with the PCSC. This statement in the
written contract is directly in conflict with the
prescribed form statement that the bill would require
placed immediately above the obligee's signature line.
The form statement (See lines 32, 33, and 34, page 6
of the bill) states: I understand that (the PCSC)
will charge a fee for all the current child support
and arrears it collects for me?
SHOULD THE FORM STATEMENT BE CORRECTED IN ORDER TO
AVOID CONFUSING THE OBLIGEE?
b. Updated information on collection efforts assures
the obligee
Certain provisions in the bill are designed to
maximize the information that an obligee would have
about the collection efforts at any given time. This
is very important, especially because child support
obligees are usually dependent on the child support
collected, and need to know whether their PCSCs are
doing a good job or not or are bilking them for fees.
For example, information on the amount of support
collected, the date on which each amount received by
the PCSC was sent to the obligee, the source of the
payment and the actions taken by the PCSC to collect,
the amount of the fee kept by the PCSC, the name and
identifying information of the person who made the
child support payment - all of this information would
assuage fears of the obligee that nothing was being
done and, at the same time, the obligee is getting the
benefit of gathering information for herself (or
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himself) in the event she decides to terminate the
contract.
AB 2781 would require that this information be made
available online, as well as by mail or telephone.
Online access would have to be via a secure Internet
website. If the information is provided by mail, it
would be sent quarterly, and if provided by any other
method, it would be updated and made available at
least monthly. Information via telephone and the
Internet would be up to date.
c. PCSC and the obligor
As to its dealings with obligors, this bill would also
ensure a fairer playing field. Among other things,
the PCSC could not engage in the behavior described in
the Reno case above (see Comment 2). AB 2781 would
prohibit a PCSC from making a false representation of
the amount of child support to be collected. In that
Reno case, the PCSC had information from the obligee
that the maximum amount of support owed was just over
$13,000. This bill would prohibit the PCSC from
telling the obligor that he owed more than that, and
would prohibit the PCSC from filing a lien against his
house for $122,000. The bill would also require PCSCs
to comply with fair debt collection practices that
other consumer debt collectors are subject to,
protecting obligors from overzealous PCSCs that call
them in the middle of the night, contact their
relatives in an attempt to extract payment from them,
call their employers repeatedly, simulate legal
process to scare employers into redirecting payments
to the PCSC, or otherwise seek to harass obligors and
others around them into paying the child support
obligation.
Although this bill only imposes some basic consumer
protections, and does not purport to be the "be all
and end all" of regulation of this industry, it begins
the process of imposing consumer protections that are
sorely lacking.
The bill would require, on or after January 1, 2008,
that all child support orders or child support
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agreement approved by the court include a separate
money judgment owed by the obligor to pay half of the
fees charged by the PCSC. [Proposed 5610(j).] It
also would make the obligor liable to the PCSC and the
obligee jointly for those fees, and PCSC may collect
those fees by any means available for the collection
of the support obligation. In other words, the PCSC
may obtain a payment plan from the obligor for the
concurrent payment of those fees. If collected, the
fee would not be credited towards child support.
Presumably then, more of the collection made on the
child support obligation would go to the obligee.
d. Obligee's right to cancel the contract
In addition to the right to cancellation within 15
business days of executing the contract, AB 2781 would
automatically terminate contracts at the end of the
contract term or when the contracted amount is
collected. Additionally, an obligee can terminate a
contract at the end of any 12-month period in which
total collections are less than 50 percent of the
collections due under a payment plan. Lastly, an
obligee can, under AB 2781, cancel a contract at any
time the PCSC commits a material breach of any
provision of the contract or a material violation of
any provision with respect to the obligee or the
obligor.
The burden on the PCSC to collect more than 50% of the
payment plan worked out with the obligor is not as
onerous as it looks. For example, if the arrears
total $10,000, and the current support is $1,000 per
month, the PCSC must be able to collect, on a payment
plan of $1,200 per month arranged with the obligor, at
least 50% of $14,400 ($1,200 x 12). If the PCSC
collected only $7,500 for the entire 12 month period
and charged a 1/3 of collections fee, the PCSC would
receive $2,500 in fees and the obligee would receive
$5,000 in child support. Most obligees would probably
be happy with receiving the $5,000 for the year, if
they were not receiving any child support at all. And
the obligee, under this bill cannot terminate the
contract based only on the amount collected being less
than ideal, because it would meet the 50% collections
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per 12-months rule.
e. Requiring certain disclosures in advertisements and
solicitations
In response to complaints that PCSCs were selecting
names that confused obligees into thinking they were a
government agency, AB 2781 would require all
advertisements and solicitations to indicate the PCSC
is not a government entity and either charges an
up-front fee even if it does not collect anything, or
charges a fee for its services. If solicitation is
made by telephone, the solicitor must state the same
disclosure in the first 30 seconds of any initial
telephone conversation between a PCSC and the obligee.
4. Opposition from Los Angeles County Bar
This bill would include, in the definition of a PCSC, an
attorney whose business is substantially comprised of
child support collections. "Substantially" means that at
least 50% of the attorney's business in terms of
remuneration or time spent, is comprised of activities
seeking to collect or enforce child support obligations
for other individuals.
The Los Angeles County Bar Association Family Law Section
is vehemently opposed to the inclusion of attorneys in
the definition of PCSC.
AB 2781 defines a "private child support
collector" so broadly that its restrictive
provisions are unjustifiably applicable to
legitimate attorneys engaged in the good faith
qualified, competent and ethical specialized
practice of fair and reasonable child support
enforcement?As the direct result of AB 2781's
overbroad definition of a "private child support
collector," not only will an obligee-mother be
"limited" in hiring a collection agency, she
will potentially also not be able to hire an
"effective, qualified, competent and ethical
private family law attorney engaged in the
specialized practice of child support
enforcement" either, even if she wished to do so
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and is perfectly willing and satisfied with the
contractual arrangements offered by such private
family law attorney of her choice."
4. Bill needs to be more organized, for ease of use
AB 2781 clearly contains more of the consumer protections
that the vetoed bill, SB 339 (Alpert, 2003) had, than did
SB 896 (Runner, 2005). At the same time, the
improvements over SB 339 are measured, and still leaves
room for further strengthening in the future. In the
meantime, this bill should provide parameters for a
growing industry, largely unregulated now, to operate in
a way that does not cause more harm than good to
Californians.
Staff suggests that for this Act to be more easily read,
understood, implemented, and accessed, it should be
reorganized and recast. The convenience of seeking
information that is already organized cannot be
overemphasized.
SHOULD THIS BILL BE REORGANIZED?
Support: California Commission on the Status of Women;
Supportkids, Inc.; Consumers Union; California
Alliance for Families and Children; California NOW
Opposition: Los Angeles County Bar Association Family Law
Section
HISTORY
Source: National Center for Youth Law; Chidlrens Advocacy
Institute (sponsors)
Related Pending Legislation: None Known
Prior Legislation: SB 339 (Alpert, 2003) Vetoed. (See
Background.)
SB 896 (Runner, 2005) (See Background.)
(This bill is currently on Assembly 2nd
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Reading.)
Prior Vote: Asm. Jud. (Ayes 6, Noes 3)
Asm. Flr. (Ayes 47, Noes 32)
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