We have a close friend, a seasoned general counsel in financial services regulation, who vividly describes the spread of consumer-style regulations into commercial products as a relentless, gelatinous monster—“The Blob.” In our friend’s view, The Blob is always expanding—never shrinking, never retreating. Its presence is constant with an insatiable drive to regulate and oversee every aspect of commercial transactions. Case in point: earlier this week, California Governor Gavin Newsom signed legislation that will expand debt collection law to commercial finance products. Specifically, California Senate Bill 1286 expands the Rosenthal Fair Debt Collection Practices Act (California FDCPA), which includes creditors collecting their own debts, in several important ways.
The bill “recasts” the statute to reach “covered commercial debts,” defined as “money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person to a lender, a commercial financing provider, as defined in Section 22800 of the Financial Code, or a debt buyer, as defined in Section 1788.50, by reason of a covered commercial credit transaction.” “Covered commercial credit transaction,” in turn, means a “transaction between a person and another person in which property, services, or money, of a total value of no more than five hundred thousand dollars ($500,000), is acquired on credit by a person from the other person for use primarily for other than personal, family, or household purposes.”
More broadly, this bill expands the protections afforded by the California FDCPA to a large number of small business finance products. This includes things like disclosures for time-barred debts, anti-harassment provisions, and protections for the victims of identity theft. To read more click here.