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California Assembly Bill No. 2424 Seeks to Amend the CA Credit Services Act

Assemblymembers Bianca Rubio (D) and Phillip Chen (R) have introduced a Bill seeking to amend the California Credit Services Act. This Bill, enrolled as of August 26, 2022, does not substantially change the existing language of the Act; however, the Act, as amended, would become more expansive in terms of who may bring claims under the Title as the Bill seeks to replace the term “buyer” with the term “consumer” for purposes of describing a person utilizing the services of a credit services organization and would prescribe other definitions in this regard. By replacing the term “buyer” with “consumer,” this amendment would allow for anyone who purchases the services of a credit service organization or who is solicited to purchase these services to bring an action for recovery of damages, injunctive relief, or both, for injuries resulting from a violation of the Credit Services Act.

Furthermore, the Bill seeks to impose several additional requirements and prohibitions on credit service organizations. The Bill would require a credit services organization to provide a consumer a monthly statement detailing the services performed and would require the organization to perform services agreed upon within 180 days of contracting for those services. This Bill would also require the information statement and contract to inform the consumer that the contract can be canceled before midnight on the fifth (5th) working day after the consumer signs it. The Bill would extend prohibitions on counseling a consumer to make untrue statements to other specified parties. Among other things, the Bill would prohibit a credit services organization from submitting a dispute to a consumer credit reporting agency, creditor, debt collector, or debt buyer more than 180 days after the disputed account has been removed from the consumer’s credit report or from failing to provide along with its first written communication to a credit reporting agency or data furnisher sufficient information to investigate a dispute of an account. The Bill would also require a consumer credit reporting agency, creditor, debt collector, or debt buyer that knows that a consumer is represented by a credit services organization to communicate with the credit services organization, except as specified. Additionally, this Bill would require a credit services organization to redact specified information in certain written communications and maintain certain information on file for four (4) years. The Bill would revise information that must be provided before a credit services contract is executed, including a notice regarding the filing of complaints with the Attorney General, and finally, the Bill would revise statements that a credit services contract must include.

If you would like to read the entire text of the newly enrolled proposed legislation, please click on the following link: https://legiscan.com/CA/text/AB2424/id/2605116/California-2021-AB2424-Enrolled.html.

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