BILL NUMBER: AB 2781	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Leno

                        FEBRUARY 24, 2006

   An act to add Chapter 9 (commencing with Section 5610) to Part 5
of Division 9 of the Family Code, relating to child support.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2781, as introduced, Leno  Child support collectors.
   Existing law governs the collection of child support by local
child support agencies, or by means of a writ of execution, a notice
of levy, or earnings assignment order.
   This bill would enact the Private Child Support Collection Act.
These provisions would regulate the activities of private child
support collectors, as defined. Among other things, the bill would
require a private child support collector to provide specified
notices and disclosures to the child support obligee in a written
contract and additional information about child support payments
during the term of the contract, authorize the obligee to cancel any
contract entered into with that entity in certain circumstances,
prescribe the rights of the parties with respect to child support
agencies and other governmental entities, and prescribe procedures
and remedies for enforcement of the provisions of the act. The bill
would also require that every court order for child support issued on
or after July 1, 2007, and every child support agreement providing
for the payment of child support approved by the court on or after
July 1, 2007, include a separate obligation owed by the child support
obligor to pay 1/2 of the fee charged by a private child support
collector, as specified. This obligation would have the force and
effect of a money judgment in favor of the private child support
collector and the child support obligee, jointly.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Chapter 9 (commencing with Section 5610) is added to
Part 5 of Division 9 of the Family Code, to read:
      CHAPTER 9.  PRIVATE CHILD SUPPORT COLLECTORS

   5610.  (a) For the purposes of this section, "private child
support collector" means any individual, corporation, attorney,
nonprofit organization, or other nongovernmental entity who is
engaged by an obligee to collect child support ordered by a court or
other tribunal for a fee or other consideration. The term does not
include any attorney who addresses issues of ongoing child support or
child support arrearages in the course of an action to establish
parentage or a child support obligation, a proceeding under Division
10 (commencing with Section 6200), a proceeding for dissolution of
marriage, legal separation, or nullity of marriage, or in post
judgment or modification proceedings related to any of those actions.
A "private child support collector" includes any private,
nongovernmental attorney whose business is substantially comprised of
the collection or enforcement of child support.  As used in this
subdivision, "substantially" means that at least 50 percent of the
attorney's business, either in terms of remuneration or time spent,
is comprised of the activity of seeking to collect or enforce child
support obligations for other individuals.
   (b) Any contract for the collection of child support between a
private child support collector and an obligee shall be written in
simple language, in at least 10-point type, signed by the private
child support collector and the obligee. The contract shall be
delivered to the obligee in a paper form that the obligee may retain
for his or her records. The contract shall include all of the
following:
   (1) An explanation of the fees imposed by contract and otherwise
permitted by law and an example of how they are calculated and
deducted.
   (2) A statement that the amount of fees to be charged is set by
the agency and is not set by state law.
   (3) An explanation of the nature of the services to be provided.
   (4) The expected duration of the contract, stated as a length of
time or as an amount to be collected by the collection agency.
   (5) An explanation of the opportunities available to the obligee
or private child support collector to cancel the contract or other
conditions under which the contract terminates.
   (6) The mailing address, street address, telephone numbers,
facsimile numbers, and Internet address or location of the private
child support collector.
   (7) A statement that the private child support collector is not a
government entity and that government entities in California provide
child support collection and enforcement services free of charge.
   (8) A statement that the private child support collector collects
only money owed to the obligee and not support assigned to the state
or county due to the receipt of CalWORKs or Temporary Assistance to
Needy Families.
   (9) A statement that the private child support collector will not
retain fees from collections that are almost completely attributable
to the actions of a government entity or any other person or entity
and is required by law to refund any fees improperly retained.
   (10) A statement that the obligee may continue to receive, or may
pursue, services through a government entity to collect support, and
the private child support collection agency will not require or
request that the obligee cease or refrain from engaging those
services.
   (11) A notice that the private child support collector is required
to keep and maintain case records for a period of four years and
four months, after the expiration of the contract and may thereafter
destroy or otherwise dispose of the records. The obligee may, prior
to destruction or disposal, retrieve those portions of the records
that are not confidential.
   (12) A "Notice of Cancellation," which shall be included with the
contract and which shall contain, in the same size font as the
contract, the following statement, written in the same language as
the contract:



             "Notice of Cancellation

You may cancel this contract, without any
penalty or obligation, within 15 business days
from the date the contract is signed or you
receive this notice, whichever is later, or at
any time if the private child support collector
commits a material breach of any provision of
the contract or a material violation of any
provision of this chapter with respect to the
obligee or the obligor, or
_____________________________ (all other
reasons for cancellation permitted).

To cancel this contract, mail or deliver a
signed copy of this cancellation notice or any
other written notice to
______________________(name of private child
support collector) at
____________________________________________
(address for mail or delivery) no later than
midnight on ______________(date).

I am canceling this
contract.______________(date)

________________________(signature)"


   (13) (A) Each private child support collector shall make the
following disclosure in any advertisement, commercial, or other
solicitation:
   "(Name of private child support collector) is a private child
support collector and not a governmental entity.  (Name of private
child support collector) charges a fee for services provided."
   (B) The disclosure required by subparagraph (A) shall be printed
in every written advertisement and solicitation as follows:
   (i) In a type size that is at least equal to one-quarter of the
largest type size used in the solicitation to advertise the
collection service. In no event shall the disclosure be printed in
less than 8-point type.
   (ii) In the same style and color of type used to advertise the
collection service.
   (iii) Immediately above, below, or beside the advertised fee
without any intervening words, pictures, marks, or symbols.
   (iv) In the same language as the advertisement.
   (C) The disclosure required by subparagraph (A) shall be broadcast
in every radio or television advertisement and solicitation. For
broadcast advertisement of 30 seconds or less, the disclosure may be
shortened as follows:
   "(Name of private child support collector) is not a governmental
entity, and charges a fee for its services."
   (D) This section shall apply to an advertisement, commercial, or
solicitation in English or any other language.
   (c) (1) An obligee shall have the right to cancel a contract with
a private support collector within 15 business days of the later of
signing the contract, or receiving a blank notice of cancellation
form, or at any time if the private child support collector commits a
material breach of any provision of the contract or a material
violation of any provision of this chapter with respect to the
obligee or the obligor.
   (2) A contract shall automatically terminate when the contract
term has expired or the contract amount has been collected, whichever
occurs sooner.
   (3) A contract shall terminate at the end of any 12-month period
in which the total amount collected by the private child support
collector is less than 50 percent of the amount scheduled to be paid
under a payment plan.
   (4) No private child support collector shall take an assignment of
the support obligation.
   (5) The private child support collector may not collect on
proceeds from a withholding order for child support if that order has
been in effect with the same employer for six months and has yielded
six months' of withholding order payments.
   (6) The private child support collector may not collect on current
child support payments.
   (7) A private child support collector that improperly retains fees
from collections that are almost completely attributable to the
actions of a government entity or to any other person or entity shall
refund all of those fees to the obligee immediately upon discovery
or notice of the improper retention of fees.
   (d) (1) A private child support collector shall provide to an
obligee all of the following information:
   (A) The name of, and other identifying information relating to,
any obligor who made child support payments collected by the private
child support collector.
   (B) The amount of support collected by the private child support
collector.
   (C) The date on which each amount was received by the private
child support collector.
   (D) The date on which each amount received by the private child
support collector was sent to the obligee.
   (E) The amount of the payment sent to the obligee.
   (F) The source of payment of support collected and the actions
affirmatively taken by the private child support collector that
resulted in the payment.
   (G) The amount and percentage of each payment kept by the private
child support collector as its fee.
   (2) The information required by paragraph (1) shall either be made
available, at the option of the obligee, by mail, telephone, or via
secure Internet access. If provided by mail, the notice shall be sent
at least quarterly.  Information accessed by telephone and the
Internet shall be up to date.
   (e) (1) A private child support collector shall maintain records
of all child support collections made on behalf of a client who is an
obligee. The records required under this section shall be maintained
by the private child support collector for the duration of the
contract plus for a period of four years and four months from the
date of the last child support payment collected by the private child
support collector on behalf of an obligee. In addition to
information required by subdivision (d), the private child support
collector shall maintain the following:
   (A) A copy of the order establishing the child support obligation
under which a collection was made by the private child support
collector.
   (B) Records of all correspondence between the private child
support collector and the obligee or obligor in a case.
   (C) Any other pertinent information relating to the child support
obligation, including any case, cause, or docket number of the court
having jurisdiction over the matter and official government payment
records obtained by the private child support collector on behalf of,
and at the request of, the obligee.
   (2) A private child support collector shall safeguard case records
in a manner reasonably expected to prevent intentional or accidental
disclosure of confidential information pertaining to the obligee or
obligor, including providing necessary protections for records
maintained in an automated system.
   (3) Every person who contracts with a private child support
collector shall have the right to review all files and documents,
both paper and electronic, in the possession of the private child
support collector regarding that obligee's case that are not required
by law to be kept confidential. The obligee, during regular business
hours, shall be provided reasonable access to and copies of the
files and records of the private child support collector regarding
all moneys received, collection attempts made, fees retained or paid
to the private child support collector, and moneys disbursed to the
obligee. The private child support collector may not charge a fee for
access to the files and records, but may require the obligee to pay
up to three cents ($.03) per page for the copies prior to their
release.
   (f)  A private child support collector shall not do any of the
following:
   (1) Collect or attempt to collect child support by means of any
conduct that is prohibited of a debt collector collecting a consumer
debt under Sections 1788.10 to 1788.16, inclusive, of the Civil Code.

   (2) Misstate the amount of the fee that may be lawfully paid the
private child support collector for the performance of the contract
or the identity of the person who is obligated to pay that fee.
   (3) Make a false representation of the amount of child support to
be collected. A private child support collector is not in violation
of this paragraph if it reasonably relied on evidence provided by the
government entity collecting child support, a court with
jurisdiction over the support obligation, or from the obligee, or
upon proof provided by the obligor.
   (4) Ask any party other than the obligor to pay the child support
obligation, unless that party is legally responsible for the
obligation or is the legal representative of the obligor.
   (5) On or after January 1, 2006, no private child support
collector may require, as a condition of providing services to the
obligee, that the obligee waive any right or procedure provided for
in any state law regarding the right to file and pursue a civil
action as provided by law. Any waiver by the obligee of the right to
file and pursue a civil action as provided by law must be knowing,
voluntary, and not made a condition of doing business with the
private child support collector. Any waiver, including, but not
limited to, an agreement to arbitrate, that is required as a
condition of doing business with the private child support collector,
shall be deemed involuntary, unconscionable, against public policy,
and unenforceable. The private child support collector has the burden
of proving that any waiver of rights, including any agreement to
arbitrate a claim, was knowing, voluntary and not made a condition of
the contract with the obligee.
   (g) (1) A person may bring an action for actual damages incurred
as a result of a violation of this section.
   (2) In addition to actual damages, a private child support
collector who willfully and knowingly violates the provisions of this
section shall be liable for a civil penalty in an amount determined
by the court, which may not be less than one hundred dollars ($100)
nor more than one thousand dollars ($1,000).
   (3) A person who prevails in an action brought pursuant to this
section is entitled to recover court costs.  Reasonable attorney's
fees shall be awarded to a prevailing obligee or obligor. On a
finding by a court that an action pursuant to this section was
brought by an obligee or obligor in bad faith or for purposes of
harassment, the court shall award the private child support collector
attorney's fees reasonably related to the work performed and costs.

   (4) A private child support collector is not in violation of this
section if the private child support collector shows, by a
preponderance of the evidence, that the action complained of was not
intentional and resulted from a bona fide error that occurred
notwithstanding the use of reasonable procedures to avoid the error.

   (5) The remedies provided in this subdivision are cumulative and
are in addition to any other procedures, rights, or remedies
available under any other law.
   (h) Any waiver of the rights, requirements, and remedies provided
by this section violates public policy and is void.
   (i) Every court order for child support issued on or after July 1,
2007, and every child support agreement providing for the payment of
child support approved by a court on or after July 1, 2007, shall
include a separate obligation owed by the child support obligor to
pay one-half of the fee charged by a private child support collector
pursuant to a contract complying with the requirements of this
section and any other child support collections costs expressly
permitted by the child support order. The obligation to pay half the
fee shall have the force and effect of a money judgment in favor of
the private child support collector and the child support obligee,
jointly. The obligation to pay the fee may be enforced by the private
child support collector by any means available to the obligee for
the enforcement of the child support order without any additional
action or order by the court, however, the fee does not constitute
child support.
   (j) If the child support order makes the obligor responsible for
payment of collection fees and costs, fees that are deducted by a
private child support collector may not be credited against child
support arrearages or interest owing on arrearages or any other money
owed by the obligor to the obligee.
   (k) If the order for child support requires payment of collection
fees and costs by the obligor, then not later than five days after
the date that the private child support collector makes its first
collection, written notice shall be provided to the obligor of (1)
the amount of arrearages subject to collection, (2) the amount of the
collection that shall be applied to the arrearage, and (3) the
amount of the collection that shall be applied to the fees and costs
of collection. The notice shall provide that, in addition to any
other procedures available, the obligor has 30 days to file a motion
to contest the amount of collection fees and costs assessed against
the obligor as well as the amount of the arrearages subject to
collection.