Fair Debt Collection Practices, Other Federal And California Laws Apply

The California Law which required collection agencies to be licensed and bonded was allowed to "sunset" effective June 30, 1992. Collection agencies no longer require a specific state license and bond. However, agencies (and creditors) may be required to comply with California's Fair Debt Collection Practices Act, and possibly California's Consumer Credit Reporting Agencies Act. These are discussed briefly in " Debt Collection" and "Fair Credit Reporting" from the previous menu. Collection agencies are, of course, subject to all Federal laws which may apply as well.

Unfair Business Practices Act

In addition, California's Unfair Business Practices Act, which begins at California Business & Professions Code Section 17000, may be used by the Attorney General, district attorneys, and others to obtain injunctions and other remedies in cases involving "unlawful, unfair, or fraudulent" business practices.

Assigned Accounts

In certain types of transactions, the collection of assigned accounts may be specifically permitted, or specifically not permitted. For example, collection agencies may not file Small Claims Court actions to recover on accounts assigned by a creditor.(See California Code of Civil Procedure Section 116.420). However, under California Civil Code section 1719 (Dishonored Check Law), Section (f) provides as follows:

"(f). A cause of action under this section may be brought in municipal court by a holder of the check or the assignee of the payee. However, if the assignee is acting on behalf of the payee, for a flat fee or percentage fee, the assignee may not charge the payee a greater flat fee or percentage fee for that portion of the amount collected that represents treble damages than is charged the payee for collecting the face amount of the check, draft, or order. This subdivision shall not apply to an action brought in small claims court."