BILL NUMBER: AB 2043 CHAPTERED 09/28/06 CHAPTER 521 FILED WITH SECRETARY OF STATE SEPTEMBER 28, 2006 APPROVED BY GOVERNOR SEPTEMBER 28, 2006 PASSED THE ASSEMBLY AUGUST 21, 2006 PASSED THE SENATE AUGUST 17, 2006 AMENDED IN SENATE AUGUST 14, 2006 AMENDED IN SENATE JUNE 7, 2006 INTRODUCED BY Committee on Banking and Finance (Calderon (Chair), Niello (Vice Chair), Chavez, Jerome Horton, La Malfa, Lieu, Parra, Ruskin, Tran, and Vargas) FEBRUARY 15, 2006 An act to amend Sections 1788.2 and 1788.18 of the Civil Code, relating to debt collection. LEGISLATIVE COUNSEL'S DIGEST AB 2043, Committee on Banking and Finance Debt collection: businesses: identity theft. Existing state and federal law regulate the collection of debts, and existing state law requires a debt collector to stop collecting a consumer debt when an alleged debtor provides the debt collector certain information, including, but not limited to, information relating to the alleged debtor's status as a victim of identity theft. Existing law permits the debt collector to recommence collection activities only upon a review of the information and upon the making of a good faith determination, as specified, that the information provided by the debtor does not establish that the debtor is not responsible for the debt. This bill would extend the debtor protections described above to a natural person, firm, association, organization, partnership, business trust, company, corporation, or limited liability company from which a debt collector seeks to collect a debt that is due and owing or alleged to be due and owing from the person or entity. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1788.2 of the Civil Code is amended to read: 1788.2. (a) Definitions and rules of construction set forth in this section are applicable for the purpose of this title. (b) The term "debt collection" means any act or practice in connection with the collection of consumer debts. (c) The term "debt collector" means any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection, but does not include an attorney or counselor at law. (d) The term "debt" means money, property or their equivalent which is due or owing or alleged to be due or owing from a natural person to another person. (e) The term "consumer credit transaction" means a transaction between a natural person and another person in which property, services or money is acquired on credit by that natural person from such other person primarily for personal, family, or household purposes. (f) The terms "consumer debt" and "consumer credit" mean money, property or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction. (g) The term "person" means a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association or other similar entity. (h) Except as provided in Section 1788.18, the term "debtor" means a natural person from whom a debt collector seeks to collect a consumer debt which is due and owing or alleged to be due and owing from such person. (i) The term "creditor" means a person who extends consumer credit to a debtor. (j) The term "consumer credit report" means any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (1) credit or insurance to be used primarily for person, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under any applicable federal or state law or regulation. The term does not include (a) any report containing information solely as to transactions or experiences between the consumer and the person making the report; (b) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device; or (c) any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his or her decision with respect to that request, if the third party advises the consumer of the name and address of the person to whom the request was made and such person makes the disclosures to the consumer required under any applicable federal or state law or regulation. (k) The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages, in whole or in part, in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer credit reports to third parties, and which uses any means or facility for the purpose of preparing or furnishing consumer credit reports. SEC. 2. Section 1788.18 of the Civil Code is amended to read: 1788.18. (a) Upon receipt from a debtor of all of the following, a debt collector shall cease collection activities until completion of the review provided in subdivision (d): (1) A copy of a police report filed by the debtor alleging that the debtor is the victim of an identity theft crime, including, but not limited to, a violation of Section 530.5 of the Penal Code, for the specific debt being collected by the debt collector. (2) The debtor's written statement that the debtor claims to be the victim of identity theft with respect to the specific debt being collected by the debt collector. (b) The written statement described in paragraph (2) of subdivision (a) shall consist of any of the following: (1) A Federal Trade Commission's Affidavit of Identity Theft. (2) A written statement containing the content of the Identity Theft Victim's Fraudulent Account Information Request offered to the public by the California Office of Privacy Protection. (3) A written statement that certifies that the representations are true, correct, and contain no material omissions of fact to the best knowledge and belief of the person submitting the certification. A person submitting the certification who declares as true any material matter pursuant to this subdivision that he or she knows to be false is guilty of a misdemeanor. The statement shall contain or be accompanied by, the following, to the extent that an item listed below is relevant to the debtor's allegation of identity theft with respect to the debt in question: (A) A statement that the debtor is a victim of identity theft. (B) A copy of the debtor's driver's license or identification card, as issued by the state. (C) Any other identification document that supports the statement of identity theft. (D) Specific facts supporting the claim of identity theft, if available. (E) Any explanation showing that the debtor did not incur the debt. (F) Any available correspondence disputing the debt after transaction information has been provided to the debtor. (G) Documentation of the residence of the debtor at the time of the alleged debt. This may include copies of bills and statements, such as utility bills, tax statements, or other statements from businesses sent to the debtor, showing that the debtor lived at another residence at the time the debt was incurred. (H) A telephone number for contacting the debtor concerning any additional information or questions, or direction that further communications to the debtor be in writing only, with the mailing address specified in the statement. (I) To the extent the debtor has information concerning who may have incurred the debt, the identification of any person whom the debtor believes is responsible. (J) An express statement that the debtor did not authorize the use of the debtor's name or personal information for incurring the debt. (K) The certification required pursuant to this paragraph shall be sufficient if it is in substantially the following form: "I certify the representations made are true, correct, and contain no material omissions of fact. _______________________ _____________________" (Date and Place) (Signature) (c) If a debtor notifies a debt collector orally that he or she is a victim of identity theft, the debt collector shall notify the debtor, orally or in writing, that the debtor's claim must be in writing. If a debtor notifies a debt collector in writing that he or she is a victim of identity theft, but omits information required pursuant to subdivision (a) or, if applicable, the certification required pursuant to paragraph (3) of subdivision (b), if the debt collector does not cease collection activities, the debt collector shall provide written notice to the debtor of the additional information that is required, or the certification required pursuant to paragraph (3) of subdivision (b), as applicable or send the debtor a copy of the Federal Trade Commission's Affidavit of Identity Theft form. (d) Upon receipt of the complete statement and information described in subdivision (a), the debt collector shall review and consider all of the information provided by the debtor and other information available to the debt collector in its file or from the creditor. The debt collector may recommence debt collection activities only upon making a good faith determination that the information does not establish that the debtor is not responsible for the specific debt in question. The debt collector's determination shall be made in a manner consistent with the provisions of 15 U.S.C. Sec. 1692f(1), as incorporated by Section 1788.17. The debt collector shall notify the debtor in writing of that determination and the basis for that determination before proceeding with any further collection activities. The debt collector's determination shall be based on all of the information provided by the debtor and other information available to the debt collector in its file or from the creditor. (e) No inference or presumption that the debt is valid or invalid, or that the debtor is liable or not liable for the debt, shall arise if the debt collector decides after the review described in subdivision (d) to cease or recommence the debt collection activities. The exercise or nonexercise of rights under this section is not a waiver of any other right or defense of the debtor or debt collector. (f) The statement and supporting documents that comply with subdivision (a) may also satisfy, to the extent those documents meet the requirements of, the notice requirement of paragraph (5) of subdivision (c) of Section 1798.93. (g) A debt collector who ceases collection activities under this section and does not recommence those collection activities, shall do all of the following: (1) If the debt collector has furnished adverse information to a consumer credit reporting agency, notify the agency to delete that information. (2) Notify the creditor that debt collection activities have been terminated based upon the debtor's claim of identity theft. (h) A debt collector who has possession of documents that the debtor is entitled to request from a creditor pursuant to Section 530.8 of the Penal Code is authorized to provide those documents to the debtor. (i) Notwithstanding subdivision (h) of Section 1788.2, for the purposes of this section, "debtor" means a natural person, firm, association, organization, partnership, business trust, company, corporation, or limited liability company from which a debt collector seeks to collect a debt that is due and owing or alleged to be due and owing from the person or entity. The remedies provided by this title shall apply equally to violations of this section.