BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1723|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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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.
AB 1723
Page 2
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
AB 1723
Page 3
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
AB 1723
Page 4
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.
AB 1723
Page 7
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
AB 1723
Page 8
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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