California Privacy and Consumer Protection Committee Gets Second Look at Bill to Amend Credit Services Act

The amendments include updated requirements for credit service organizations on submitting disputes to debt collectors and written communications to a credit reporting agency or data furnisher.

04/14/2022 1:00 P.M.

2 minute read

The California Assembly Committee on Privacy and Consumer Protection will meet for a hearing April 19 for a reading of a bill amending the Credit Services Act of 1984 that would require the Department of Financial Protection and Innovation (DFPI) to register and regulate credit services organizations.

The proposed amendments would implement changes to credit services organizations’ processes to submit a dispute to debt collectors and written communications to a credit reporting agency (CRA) or data furnisher.

California’s State Assembly Committee on Banking and Finance held the first hearing on the bill last month and voted 9-0 to pass the bill as amended, ACA International previously reported.

Currently, the Credit Services Act of 1984 defines and regulates the activities of credit services organizations and “generally defines a credit services organization as a person who, for payment, performs specified credit-related services, such as improving a buyer’s credit record and obtaining loans. Existing law requires credit services organizations to obtain a surety bond, as specified, before conducting business and requires that they register with the Attorney General, subject to a fee of $100.”

California Assemblymember Blanca Rubio, author of A.B. 2424, seeks to amend the Credit Services Act of 1984 by:

  • Replacing the term “buyer” with the term “consumer” for purposes of describing a person utilizing the services of a credit services organization prescribe other definitions in this regard.
  • Requiring a credit services organization to provide a consumer a monthly statement detailing the services performed and for the organization to perform services agreed upon within 180 days of contracting for those services. Because the bill would change the definition of a crime, it would impose a state-mandated local program.
  • Requiring the information statement and contract to inform the consumer that the contract can be canceled before midnight on the fifth working day after the consumer signs it.
  • Extending prohibitions on counseling a consumer to make untrue statements to other specified parties.
  • Prohibiting a credit services organization from submitting a dispute to a consumer CRA, creditor, debt collector, or debt buyer more than 180 days after the disputed account has been removed, or from failing to provide along with its first written communication to a CRA or data furnisher sufficient information to investigate a dispute of an account.
  • Requiring a consumer CRA, creditor, debt collector, or debt buyer that knows that a consumer is represented by a credit service organization to communicate with the credit services organization, except as specified.

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