Summary of AB 1904
AB 1904, The Consumers Legal Remedies Act, is a recently proposed amendment to Section 1770 of the Civil Code seeking to impose additional disclosure requirements upon certain financial services companies, including debt relief and debt service companies, that solicit California consumers.
In its current form, AB 1904 would require companies offering or providing financial services to California consumers to make certain specific disclosures on their advertisements. Some disclosures include, among others, the name of the company, its contact information, and a written statement that the solicitation is an advertisement.1
Who proposed AB 1904?
AB 1904 was introduced February 9, 2022 by Assemblymember Timothy Grayson (D). It is supported by the California Low Income Consumer Coalition (CLICC). CLICC proposes bills to the California Legislature to provide greater autonomy and support for low-income California residents in various consumer sectors, including those seeking debt relief.
Would AB 1904 affect debt service companies?
The proposed legislation includes the following entities as “covered persons:”2 companies providing debt settlement services3, payment processors4, and those marketing debt settlement services to consumers in California.5 Please see the referenced definitions in the footnotes, as these are incorporated by the proposed legislation.
Why is AB 1904 important to debt service companies?
If adopted in its current form, debt settlement companies, including payment processors and those advertising debt settlement services to consumers in California, would be required to make additional disclosures promulgated by this proposed legislation. Failure to follow the mandates contained in AB 1904 would result in a finding of unlawful advertising practices.
Current Status of AB 1904
As of March 29, 2022, AB 1904 has been referred to the Committee on Privacy and Consumer Protection.
If you would like to discuss more about how proposed legislation AB 1904 could affect your business, please contact Shipkevich PLLC through our website.
1 California Bill Analysis, A.B. 1904 Assem., § 1 (Apr. 19, 2022).
2 Cal. Fin. Code Ann. § 90005 (f)(1),(f)(3) (West) Covered person” means, to the extent not preempted by federal law, any of the following: (1) Any person that engages in offering or providing a consumer financial product or service to a resident of this state; (2) Any affiliate of a person described in this subdivision if the affiliate acts as a service provider to the person; (3) Any service provider to the extent that the person engages in the offering or provision of its own consumer financial product or service.
3 Id. at (e)(2), (k)(4) “Consumer financial product or service” means Engaging in deposit-taking activities, transmitting or exchanging funds, or otherwise acting as a custodian of funds or any financial instrument for use by or on behalf of a consumer.
4 Id. at (i)(3) “Deposit-taking activity” means…The receipt of funds…received or held by a covered person or an agent for a covered person for the purpose of facilitating a payment or transferring funds or value of funds between a consumer and a third party.
5 Id. at § (f)(1). “Covered person” means, to the extent not preempted by federal law, any of the following: (1) Any person that engages in offering or providing a consumer financial product or service to a resident of this state.’”