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Why Creditors Should Pay Attention To California Rosenthal Act

Entities that extended credit directly to consumers such as finance companies, banks and telecommunication companies do not act as debt collectors. These creditors may not adhere to the Fair Debt Collection Practices Act (FDCPA) principles in recovering funds owed to them. However, the requirements of this Act cannot be overlooked especially if a creditor wants to collect debt from a consumer who resides in California. According to California Rosenthal Act, a debt collector refers to any creditor who tries to recover a consumer debt from a consumer resident in California. Thus, the act regards the creditor as well as the collection agencies as “debtor collector”. Also any person who often recovers consumer debts or any company that create tools used in recovering consumer debts can be referred as a debt collector. A consumer is any person to whom credit is extended during the course of a transaction .The collection agency is a corporate organization who recovers debts on behalf of the creditors. Thus, it operates as a third party in collection of consumer debts owed to a creditor. This company may be a subsidiary of the company that extended the credit (in which case the lending company has a holding interest in the collection agency) or it may be a division of the lending company. Despite the requirements of the Rosenthal Act which regulates the collection of debts from customers in California, the Act also includes most of the guidelines of Fair Debt Collection Practice Act, FDCPA. The Act gives extra protection to the consumers than the FDCPA. Thus, overlooking the debt collections rules set by the FDCPA while collecting debts from a consumer located in California may amount to violation of California law. The Fair Debt Collection Practice Act (FDCPA) is not entirely similar to the California Rosenthal Act as two important exceptions to the Rosenthal Act exist. Creditors are not compelled to send notice to the debtors as the FDCPA guidelines insists. Also, the creditors are not required to send the validation notice to the debtors. The Rosenthal Act also forbids the creditors from making multiple calls to the consumers with the intention of provoking the latter. A creditor is required to identify himself in a voice mail as failure to do so is regarded as an infringement of the law. However, some debtors do file claims against the creditors for calling them at inconvenient times. In such a situation, the consumer is paid damages for violation of his privacy. A creditor is not supposed to contact a consumer that is represented by an attorney directly except for the purpose of the statement of account regarding the debt. However, the Act is not violated if monthly bills are sent to the consumer. A creditor who is also an occasional debt collector is not compelled to adhere to the requirements of the Rosenthal Act. Such a debt collector rarely collects debt and may do so to recover the funds owed by an acquaintance. Also, the Act covers only debts owed as a result of payment made for goods and services for family and personal purposes.  Violation of Rosenthal Act The California Act that promotes fair debt collection has the following requirements.

  • The debt collector should not contact a consumer who is represented by an attorney unless the attorney refuses to discuss the debt with the collectors on behalf of the consumer. In such case, the debt collector or creditor is free to contact the consumer.
 
  • A debt collector should not use abusive language or threats on the consumer in an attempt to collect debt from the consumer. Use of threats or physical force on the consumer is prohibited. A debt collector should not dent the reputation of a consumer because of an overdue debt. The consumer should not be framed up for a crime he did not commit as a punishment for not clearing his debt.
 
  • A debt collector should not discuss a consumer’s debt with other people but he may verify the consumer’s employment and personal data from others. The name of the consumer should not be published for failure to settle the debt. Also, the envelope containing the mail sent to the consumer should not contain any symbol to embarrass the consumer. The consumer’s debt should not be revealed to the debtor’s family members even if the debtor is a minor.
 
  • A debt collector should limit his communication with a consumer. The consumer should not be harassed with incessant calls or calls while at work. Abusive language should not be used by the debt collector even during phone conversations and the caller should identify his or herself on the phone.
 
  • It is forbidden for debt collectors to misrepresent themselves. A debtor collector should not identify himself as someone else for the purpose of collecting a debt as such a practice is regarded as impersonation. The debt collector should not use stationeries belonging to an attorney in writing to a debtor neither should he threaten the consumer with a lawsuit that they have no intention of filing. He can only operate as a government agency if he is recovering a debt for the government.
 
  • Judicial proceedings should be respected by debt collectors. A notice of a lawsuit should be served to the consumer if a debt collector sues him or her to court. However, the lawsuit should be filed in the country where the debtor is residing currently or where he or she had lived when the loan was obtained. A debt collector should be criminal practices if he uses fake documents in recovering of a debt from the consumer.
    Consequences Of Rosenthal Act Violation A consumer has the right to file a complaint against any debt collector that violates the Rosenthal Act in an attempt to recover a debt from the consumer. Damages should be paid to the consumer if he defeats the debt collector in the court of law. Thus, debt collectors should endeavor to adhere strictly to the Rosenthal Act while collecting debts from consumer in California.  

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