Perspectives
California SB 1286: What Debt Collectors Need to Know- Part 1
California’s SB 1286, effective July 1, 2025, expands the Rosenthal Fair Debt Collection Practices Act to include certain commercial debts. For businesses and law firms involved in debt collection, understanding these changes is critical to staying compliant and avoiding costly legal issues.
Which Debts Are Covered?
SB 1286 appies to “Covered Commercial Debt” or “Covered Commercial Credit” entered into, renewed, sold, or assigned on or after July 1, 2025.
A debt is considered covered if:
- It is owed by a natural person (not an LLC or corporation)
- The cummulative debt is $500,000 or less
- The debtor is either the primary obligor or a guarantor of a covered commercial debt
Covered debt can include money owed to:
- Lenders
- Commercial financing providers
- Debt buyers
In short, individual guarantors of commercial debt are now protected under Rosenthal if the debt is $500,000 or less.
Who Must Comply?
SB 1286 applies to:
- Original creditors
- Assigneeds
- Debt buyers
- Collection agencies
- Law firms regularly engaged in debt collection
Notice Requirements
Debt collectors must provide a specific notice in their first written communication with a debtor. This notice must clearly explain the debtor’s right to request records that include:
- Authorization to collect the debt
- The debt balance, including interest and fees
- Dates of delinquency or last payment
- Creditor name and account number
- Debtor’s last known address from the creditor’s records
- Names and addresses of any other parties that debt was assigned to
If the debt arises from an oral contract in a language other than English, the notice must be provided in that language. Additionally, if the collector primarily used a non-English language during the initial contact, the written notice must be delivered in that language within 5 business days.
Responding to Written Requests
If a debtor submits a written request for more information, collectors must provide:
- Proof of authority to collect the debt
- A breakdown of the debt balance, interest, and fees
- Dates of delinquency or last payment
- Creditor name, address, and account number
- Debtor’s last known address
- Names and addresses of any other assignees
- Debt collector’s California license number, if applicable
This information must be provided within 30 calendar days, and if it cannot be produced within that timeframe, all collection activity must stop until it is available.
| WFJ recommends treating any dispute or request for additional information as a formal “written request” to ensure compliance.
Identity Theft Claims
If a debtor claims identity theft, whether orally, in writing, or via police/FTC report, all collection activity must stop until a good faith determination is made that the debtor is responsible for the debt.
If collection continues, the debtor must be notified of the results of the investigation. If reporting to credit bureaus, any account under investigation must be removed if collection ceases.