The Rosenthal Act

Although the Fair Debt Collection Practices Act (FDCPA) applies to every state, not all states provide its resident’s additional protection from collectors like California provides its residents under the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act). In other words, California residents are protected under two laws, both the federal law (FDCPA) and the state law (the Rosenthal Act). The most important distinction between the FDCPA and the Rosenthal Act is the fact that the Rosenthal Act allows protection from first-party creditors. That is, credit card companies cannot harass debtors while attempting to collect debts.

The legislative intent behind the Rosenthal Act is quite clear. Section 1788.1 of The Rosenthal Act states, “The Legislature makes the following findings:

(1) The banking and credit system and grantors of credit to consumers are dependent upon the collection of just and owing debts. Unfair or deceptive collection practices undermine the public confidence which is essential to the continued functioning of the banking and credit system and sound extensions of credit to consumers.

(2) There is need to ensure that debt collectors and debtors exercise their responsibilities to one another with fairness, honesty and due regard for the rights of the other.”

Although most of the cases I handle are FDCPA cases against third-party collection agencies, I think the Rosenthal Act is a valuable second layer of protection provided to California residents because first-party creditors can be some of the most aggressive debt collectors out there. This is most likely the case because very few states give its residents protection from first-party creditors. In other words, credit card companies’ collection departments may operate under the assumption that the FDCPA does not apply to them, so collection efforts may be a little more aggressive. Although this assumption is correct regarding the FDCPA, credit card companies should be careful when collecting debts from residents in California.

I represented a husband and wife in 2009 against a credit card company that seemed to be operating under the assumption that they were not bound by the FDCPA, and therefore, this company’s collection efforts were far from fair and honest. Not only did this credit card company call my client and her husband day and night (7 calls in 1 hour, including 3 calls in 1 minute), they called the husband’s chain of command. This credit card company put my client’s military career in jeopardy over a $5000.00 credit card bill. Additionally, this credit card company continued to call my clients after they knew I represented them. Had my clients lived in any other state, they may not have been protected from this type of harassment. Fortunately, my clients lived in California, and consequently, were protected under the Rosenthal Act. In the end, I stopped the harassment, and my clients received over $5000.00 in debt relief and over $6000.00 in damages. Plus, pursuant to the Rosenthal Act, the credit card company paid all of my attorney’s fees and costs. My clients did not owe me a dime for my service!

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