BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   THIRD READING 


          Bill No:  AB 1723
          Author:   Dodd (D), et al.
          Amended:  8/8/16 in Senate
          Vote:     21 

           SENATE JUDICIARY COMMITTEE:  7-0, 6/28/16
           AYES:  Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning,  
            Wieckowski

           ASSEMBLY FLOOR:  77-0, 4/28/16 - See last page for vote

           SUBJECT:   Debt collection


          SOURCE:    Author


          DIGEST:  This bill specifies that a debt collector shall  
          initiate its review of an account within 10 business days of  
          receiving certain information that a consumer has become the  
          victim of identity theft and that the debt being collected is  
          not the responsibility of the consumer.  This bill requires the  
          debt collector to notify, within 10 business days, any consumer  
          credit reporting agency to which the debt collector furnished  
          adverse information pertaining to a creditor's account that the  
          account is disputed, and requires the debt collector to send  
          notice of its determination to the debtor no later than 10  
          business days after concluding the review.  This bill also  
          prohibits a creditor from selling the debt to a debt collector  
          if the creditor receives notice that the debtor is a victim of  
          identity theft, as specified.










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          Senate Floor Amendments of 8/8/16 correct an erroneous  
          cross-reference.


          ANALYSIS:  


          Existing law:

          1)Requires consumer credit reporting agencies, under the  
            California Consumer Credit Reporting Agencies Act (Civ. Code  
            Sec. 1785.1 et seq.) and the Federal Fair Credit Reporting Act  
            (15 U.S.C. Sec. 1681 et seq.), to adopt reasonable procedures  
            for meeting the needs of commerce for consumer credit,  
            personnel, insurance, hiring of a dwelling unit, and other  
            information in a manner which is fair and equitable to the  
            consumer, with regard to the confidentiality, accuracy,  
            relevancy, and proper utilization of such information.  (Civ.  
            Code Sec. 1785.1(d); 15 U.S.C. Sec. 1681(b).)

          2)Permits a consumer to place a "security freeze" on his or her  
            credit report, prohibiting consumer credit reporting agencies  
            from releasing the consumer's credit report or any information  
            contained in it unless the consumer expressly authorizes the  
            release.  (Civ. Code Sec. 1785.11.2(a).)

          3)Requires a debt collector to cease collection activities until  
            completion of a specified review upon receipt from a debtor of  
            both of the following:

                 A copy of a police report filed by the debtor alleging  
               that the debtor is the victim of an identity theft crime  
               for the specific debt being collected by the debt  
               collector; and

                 A 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, as  
               specified.  (Civ. Code Sec. 1788.18(a).)

          1)Specifies that upon receipt of the information described  
            above, 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  







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            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.  (Civ. Code  
            Sec. 1788.18(d).)

          2)Specifies that 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 to cease or recommence the debt collection  
            activities.  (Civ. Code Sec. 1788.18(e).)

          3)States that a debt collector who ceases collection activities  
            and does not recommence those collection activities shall do  
            all of the following:

                 If the debt collector has furnished adverse information  
               to a consumer credit reporting agency, notify the agency to  
               delete that information; and

                 Notify the creditor that debt collection activities have  
               been terminated based upon the debtor's claim of identity  
               theft.  (Civ. Code Sec. 1788.18(g).)


          This bill:

          1)Specifies that a debt collector shall initiate its review to  
            consider all of the information provided by the debtor and  
            other information available to the debt collector in its file  
            or from the creditor within 10 business days of receiving the  
            information.

          2)Specifies that within 10 business days of receiving the  
            information, the debt collector shall notify a consumer credit  
            reporting agency that an account is disputed if the debt  
            collector furnished the agency adverse information about the  
            debtor.

          3)Specifies that the debt collector shall send notice of its  
            determination to the debtor no later than 10 business days  
            after concluding its review.

          4)States that a debt collector who ceases and does not  







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            recommence collection activities in response to debtor's  
            claims to be the victim of identity theft with respect to the  
            specific debt being collected shall do all of the following:

                 If the debt collector has furnished adverse information  
               to a consumer credit reporting agency, notify the agency to  
               delete that information no later than 10 business days  
               after making its determination; and

                 Notify the creditor no later than 10 business days after  
               making its determination that debt collection activities  
               have been terminated based upon the debtor's claim of  
               identity theft.

          1)Prohibits a creditor from selling a debt for which the  
            creditor has received a notice that the debtor is a victim of  
            identity theft, as specified.


          Background
          
          According to the Federal Trade Commission's (FTC) "Consumer  
          Sentinel Network Data Book for January - December 2015,"  
          California had more identity theft complaints-55,305-than any  
          other state.  For every 100,000 people in California, there were  
          141.3 identity theft complaints.  Nationwide, identity theft has  
          increased more than five-fold during the past 15 years, with the  
          FTC receiving almost a half-million complaints from consumers in  
          2015 alone.  (Federal Trade Commission, Consumer Sentinel  
          Network Data Book for January - December 2015 (Feb. 2016)  
           
                                                                    Page  5


            return in your name and get your refund.  In some extreme  
            cases, a thief might even give your name to the police during  
            an arrest.  (Federal Trade Commission, Taking Charge: What To  
            Do If Your Identity Is Stolen (Apr. 2013)  
             
                                                                    Page  6


            determination to a consumer no later than 10 business days  
            after concluding its review.   The bill would also prohibit a  
            creditor from selling specified debts to a debt collector when  
            the debtor is a victim of identity theft.


          Related/Prior Legislation
           
           AB 1580 (Gatto, et. al., 2016) requires a consumer credit  
          reporting agency to place a security freeze on the credit file  
          of a protected consumer upon the request of, and submission of  
          specified information by, the protected consumer's  
          representative.  This bill defines a protected consumer as any  
          of the following: an individual who is under 16 years of age at  
          the time a request for the placement of a security freeze is  
          made; an incapacitated person or a protected individual for whom  
          a guardian or conservator has been appointed; or a person under  
          the jurisdiction of a county welfare department or county  
          probation department who has been placed in a foster care  
          setting and is under 16 years of age at the time a request for a  
          security freeze is made.  The bill is pending on the Senate  
          Floor.

          SB 641 (Wieckowski, Chapter 804, Statutes of 2015) added a  
          provision to the Fair Debt Buying Practices Act to provide  
          consumers, in limited circumstances involving actions brought by  
          debt buyers, extended time to file a motion to set aside a  
          default or default judgment and for leave to defend an action  
          relating to debt, if the service of summons did not result in  
          actual notice to the consumer in time to defend the action.

          AB 2374 (Hernandez, Chapter 645, Statutes of 2012) prohibited  
          credit reporting agencies from charging specified consumers any  
          fee for the initial placement of a security freeze, but  
          authorized such agencies to charge a fee of up to $5 for  
          lifting, removing, or replacing a security freeze.

          AB 372 (Salas, Chapter 151, Statutes of 2008) permitted a credit  
          reporting agency to charge a fee of no more than $5 to a  
          consumer 65 years of age or older and no more than $10 to other  
          consumers for a request for a security freeze, removal of the  
          freeze, or temporary lifting of the freeze for a period of time  
          or for a specific party.








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          AB 2043 (Banking and Finance Committee, Chapter 521, Statutes of  
          2006) authorized specified business entities that become the  
          victims of identity theft to utilize debt relief protections  
          available to natural persons who are victimized by identity  
          theft.

          AB 1294 (Wiggins, Chapter 287, Statutes of 2003) required a debt  
          collector to stop collecting a consumer's debt if an alleged  
          debtor provides the collector with specified information showing  
          that the debtor is a victim of identity theft, as specified.

          SB 168 (Bowen, Chapter 720, Statutes of 2001) gave California  
          consumers the right to place a freeze on their credit reports,  
          which, while in place, prohibits a credit reporting agency from  
          releasing the consumer's credit report without the express  
          authorization of the consumer.

          AB 156 (Murray, Chapter 768, Statutes of 1997) formally  
          recognized identity theft as a crime, providing that it is a  
          misdemeanor for a person to willfully obtain personal  
          identifying information of another and use that information to  
          obtain, or attempt to obtain, credit, goods, or services in the  
          name of the another person without the consent of that person.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified8/13/16)


          California Attorney General Kamala Harris
          California Association of Collectors
          California Bankers Association
          California Police Chiefs Association
          Consumer Attorneys of California
          Contra Costa District Attorney's Office
          Encore Capital Group
          Los Angeles County Board of Supervisors
          Napa County District Attorney's Office
          Privacy Rights Clearinghouse
          Sonoma County District Attorney's Office
          Yolo County District Attorney's Office







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          OPPOSITION:   (Verified8/2/16)


          None received

          ASSEMBLY FLOOR:  77-0, 4/28/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty,  
            Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Daly, Mathis, Olsen

          Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
          8/13/16 17:20:09


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