As anticipated, Governor Gavin Newsom recently signed several key bills into law, focusing on consumer protections and financial fairness. These new laws are set to safeguard Californians from the burdens of medical debt, misleading subscription services, and unfair banking fees.Ā
Medical Debt Relief and Credit Reporting ReformĀ
Senate Bill 1061 (SB 1061), championed by State Senator Monique LimĆ³n (D-Santa Barbara) and supported by Attorney General Rob Bonta, was passed with broad supportā58-9 in the Assembly and 31-8 in the Senate. This landmark legislation aims to protect consumers from the detrimental impact of medical debt on their credit reports. Under this new law, medical debt will no longer be included on credit reports, ensuring that individuals aren’t unfairly penalized for necessary healthcare expenses.Ā
The bill also prevents medical debt from being used as a negative factor in credit decisions, allowing Californians more time to handle their medical bills before debt collection and reporting actions can occur. Senator LimĆ³n expressed the importance of this legislation, stating, āNo Californian should be unable to secure housing, a loan, or even a job because they accessed necessary medical care. With this new law, California is stepping up to protect consumers impacted by the effects of medical debt.āĀ
Governor Newsom echoed this sentiment, saying, āNobody wants to get ripped off, whether itās a small subscription fee thatās seemingly impossible to cancel or massive medical debts which force families into financial ruin. Weāre strengthening protections for Californians across the board and helping save consumers money.āĀ
Simplifying Subscription CancellationsĀ
Assembly Bill 2863 (AB 2863), introduced by Assemblymember Pilar Schiavo (D-Chatsworth), addresses the challenges consumers face with auto-renewing subscription services that are easy to sign up for but often difficult to cancel. This bill requires businesses to provide an easy and straightforward cancellation process, allowing customers to cancel their subscriptions using the same medium they used to sign up. For instance, if someone subscribes online, they must be given an online click-to-cancel option.Ā
Assemblymember Schiavo emphasized the bill’s importance, noting, āAB 2863 is the most comprehensive āClick to Cancelā legislation in the nation, ensuring Californians can cancel unwanted automatic subscription renewals just as easily as they signed up ā with just a click or two.ā This change aims to protect consumers from unnecessary charges, giving them greater control over their finances.Ā
Protecting Against Unfair Banking FeesĀ
In addition to medical debt and subscription protections, California has introduced measures to combat unfair banking fees.Ā Ā
Assembly Bill 2017 (AB 2017), sponsored by Assemblymember Tim Grayson (D-Concord), prohibits certain banks and credit unions from charging nonsufficient funds (NSF) fees when a transaction is declined due to insufficient funds.Ā Ā
Senate Bill 1075 (SB 1075), introduced by Senator Steven Bradford (D-Gardena), sets limits on the overdraft fees that credit unions can charge.Ā
These measures target lower-income Californians who are disproportionately affected by financial fees that can push them into deeper financial hardship.Ā
Additional Legislation Addressing Civil Actions and Debt CollectionĀ
Gov. Newsom also signed several other bills related to consumer protection:Ā
AB 2837, sponsored by Assemblymember Rebecca Bauer-Kahan (D-Orinda), introduces new requirements related to service and execution of wage garnishments or bank levies in California.Ā
SB 1286, sponsored by Senator Dave Min (D-Irvine), expands the Rosenthal Fair Debt Collection Practices Act to include commercial debts. This law clarifies the terms ācovered commercial debtā and ācovered commercial creditā and sets thresholds for financial obligations covered under the act.Ā
Looking AheadĀ
These new laws, which take effect in 2025, signal Californiaās commitment to protecting consumers from financial exploitation and ensuring fair business practices. By addressing medical debt, unfair fees, and misleading subscription practices, California sets a strong precedent for consumer rights and financial transparency.Ā
Author:Ā Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clientsā criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jenniferās guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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