BILL NUMBER: AB 2781 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 22, 2006
AMENDED IN ASSEMBLY APRIL 18, 2006
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 amended, 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 an 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 January 1, 2008, and every child support agreement
providing for the payment of child support approved by the court on
or after January 1, 2008, include a separate obligation owed by the
child support obligor to pay 1/2 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. The bill would also establish requirements
relating to the compensation of attorneys who are private child
support collectors.
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) A statement that the private child support
collector cannot charge fees on current support if the obligee
received any current child support during the 6 months preceding
execution for the contract with the private collector.
(4) An explanation of the nature of the services to be
provided.
(4)
(5) The expected duration of the contract, stated as a
length of time or as an amount to be collected by the collection
agency.
(5)
(6) 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)
(7) The mailing address, street address, telephone
numbers, facsimile numbers, and Internet address or location of the
private child support collector.
(7)
(8) 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)
(9) 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)
(10) A statement that the private child support
collector will not retain fees from collections that are primarily
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)
(11) 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)
(12 ) 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)
(13 ) 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.
(14) (A) Each private child support collector:
(i) That charges any initial fee, processing fee, application fee,
filing fees, or other fee or assessment that must be paid by an
obligee regardless of whether any child support collection is made on
behalf of the obligee shall make the following disclosure in every
radio, television, or print advertisement intended for a target
audience consisting primarily of California residents:
"(Name of private child support collector) is not a governmental
entity and charges an up-front fee for its services even if it does
not collect anything."
(ii) That does not charge any fee or assessment specified in
subparagraph (i) shall make the following disclosure in every radio,
television, or print advertisement aired for a target audience
consisting primarily of California residents:
"(Name of private child support collector) is not a governmental
entity and charges a fee for its services."
(B) The disclosures required in subparagraph (A) shall also be
stated during the first 30 seconds of any initial telephone
conversation with an obligee and in the private child support
collector's contract.
(C) The disclosures required by subparagraph (A) shall be printed
in the contract, as required by subparagraph (B), as follows:
(i) In a type size that is at least equal to one-quarter of the
largest type size used in the contract. In no event shall the
disclosure be printed in less than 8-point type.
(ii) In a contrasting style, and contrasting color or bold type
that is equally or more visible than the type used in the contract.
(iii) Immediately above, below, or beside the stated fee without
any intervening words, pictures, marks, or symbols.
(iv) In the same language as the contract.
(15) The following statement by the obligee on the first page of
the contract:
"I understand that this contract calls for (name of private child
support collector) to collect money owed to me, and not money owed to
the state or county. If child support is owed to the state or county
because I am receiving or have received program benefits from
CalWORKs or Temporary Assistance to Needy Families, then (name of
private child support collector) cannot collect that money for me. If
I start to receive program benefits from CalWORKs or Temporary
Assistance to Needy Families during this contract, I must notify
(name of private child support collector) in writing."
"I declare by my signature below that the child support to be
collected for me pursuant to this contract is not assigned to the
state or county as of the time I sign this contract. I agree that I
will give written notice to the private child support collector if I
apply for program benefits under CalWORKs or Temporary Assistance to
Needy Families during the term of this contract."
(16) (A) The following statement by the obligee immediately above
the signature line of the contract:
"I understand that (name of private child support collector) will
charge a fee for all the current child support and arrears it
collects for me until the entire contract amount is collected or the
contract terminates for another reason. I also understand that
depending on the frequency and size of payments, it could take years
for the amount specified in my contract to be collected. This means
that if (name of private child support collector) is collecting my
current support by wage withholding or other means, I will not
receive the full amount of my periodic court-ordered current support
until the contract terminates since (name of private child support
collector) will be deducting its fee from the periodic court-ordered
current support it collects for me.
(B) The statement required by subparagraph (A) shall:
(i) Be in a type size that is at least equal to one-quarter of the
largest type size used in the contract. In no event shall the
disclosure be printed in less than 8-point type.
(ii) Be in a contrasting style, and contrasting color or bold
type, which is equally or more visible than the type used in the
contract.
(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) An obligee shall have the right to cancel a contract with a
private child support collector 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, subject to all
limitations provided for in the contract, collect the greater of the
following:
(A) The proceeds from a withholding order for child support only
if that order has been in effect with the same employer for less than
six months or has yielded less than six months' of withholding order
payments.
(B) The actual costs established by the private child support
collector to collect the proceeds of the withholding order.
(6) The private child support collector may not collect on current
child support payments.
(7)
(4) An assignment to a private child support collector is a
voluntary assignment for the purpose of collecting the domestic
support obligation as defined in Section 101 of Title 11 of the
United States Bankruptcy Code (11 U.S.C. Section 101 (14 A)).
(5) The private child support collector 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
private child support collector. A private child support collector
shall inquire of the obligee and record the month and year of the
last current support payment and may rely on information provided by
the obligee in determining whether a fee may be charged on current
support.
(6) A private child support collector that improperly
retains fees from collections that are primarily 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 and, if provided by any other method, the
information shall be updated and made available at least monthly
. Information accessed by telephone and the Internet shall be
up to date.
(3) A private child support collector shall establish a direct
deposit account with the state disbursement unit and shall within two
business days from the date the funds are dispersed from the state
disbursement unit to the private child support collector, if a
portion of the funds constitute an obligor's fee, notify the
Department of Child Support Services of the portion of each
collection that constitutes a fee. The notification shall be sent by
the private child support collector to the department in an
electronic format to be determined by the department.
(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 for the information specified in this
paragraph 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 ($0.03) per page for the copies prior to their
release.
(f) If an obligee contracts with a private child
support collector to collect child support, the private child support
collector shall provide, prior to commencing collection activities,
written notice to the local child support agency that is enforcing
the obligee's support order, if known, or the local child support
agency for the county in which the obligee resides as of the time the
contract is signed by the obligee. The notice shall identify the
obligee and the amount of the arrearage claimed by the obligee.
(g) 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.
This chapter does not modify, alter, or amend the definition of
a debt or a debt collector under the Rosenthal Fair Debt Collection
Practices Act, Title 1.6C (commencing with Section 1788) of Part 4 of
Division 3 of the Civil Code.
(2) Misstate the amount of the fee that may be lawfully paid to
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
sufficient documentation provided by the
government entity collecting child support, a court with jurisdiction
over the support obligation, or from the obligee, or upon
proof sufficient documentation 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, 2007, 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, or that the obligee agree to resolve disputes in a
jurisdiction outside of California or to the application of laws
other than those of California, as provided by law. Any waiver by the
obligee of the right to file and pursue a civil action, the right to
file and pursue a civil action in California, or the right to rely
upon California law 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 or regarding choice of forum or choice of law,
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 or regarding choice of
forum or choice of law, was knowing, voluntary , and not
made a condition of the contract with the obligee.
(g)
(h) (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.
(A) The prevailing
party in any action pursuant to this section shall be entitled to
recover the costs of the action. Reasonable attorney's fees, which
shall be based on the time necessarily expended to enforce the
liability, shall be awarded to a prevailing party, other than the
private child support collector, asserting rights under this section.
Reasonable attorney's fees may be awarded to a prevailing private
child support collector if the court finds that the party bringing
the action did not prosecute the action in good faith.
(B) In an action by an obligor under this chapter, the private
child support collector shall have no civil liability under this
chapter to the obligor under any circumstance in which a debt
collector would not have civil liability under Section 1788.30 of the
Civil Code.
(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)
(i) Any waiver of the rights, requirements, and
remedies provided by this section violates public policy and is void.
(i)
(j) Every court order for child support issued on or
after January 1, 2008, and every child support agreement providing
for the payment of child support approved by a court on or after
January 1, 2008, shall include a separate obligation
money judgment 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
nothing in this section shall be construed to grant
the private child support collector any enforcement remedies beyond
those authorized by federal or state law. Any fee collected from the
obligor pursuant to a contract complying with the requirements of
this section, shall not constitute child support.
(j)
(k) 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)
(l) 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.
(l)
(m) Notwithstanding any other provision of this
section, including provisions establishing a right of cancellation
and requiring notice thereof, any contract for the collection of
child support between an attorney who is a "private child support
collector" pursuant to subdivision (a) shall conform to the statutes,
rules, and case law governing attorney conduct, including the
provisions of law providing that a contract with an attorney is
cancelable by the attorney's client at any time. Upon cancellation of
that contract, the attorney may seek compensation as provided by
law, including, where applicable, a claim for the reasonable value of
any services rendered to the attorney's client pursuant to the
doctrine of quantum meruit, provided those services lead to the
collection of support and the compensation is limited to what would
have been collected had the contract been in effect. To the extent
that the provisions of this section are in conflict with the
provisions of state law governing the conduct of attorneys, the more
specific law shall control. If there is no conflict, an attorney who
is a "private child support collector" pursuant to subdivision (a)
shall conform to the provisions of this section.
(n) Any fees or monetary obligations resulting from the contract
between an obligee parent and a private child support collector, or
moneys owed to a private child support collector by the obligor
parent or obligee parent as a result of the private child support
collector's efforts, does not without further action create a lien on
real property nor shall 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. Nothing contained herein,
however, shall prevent a private child support collector from
collecting fees it is owed by obtaining and recording a new judgment
lien as otherwise authorized by law.