AB-1166 • 2026

Fair Debt Settlement Practices Act.

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Valencia
Last action: 2025-08-29
Official status: In committee: Held under submission.
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details on enforcement mechanisms or exact changes beyond expanding protections.

Fair Debt Settlement Practices Act

This act expands existing protections for consumers dealing with debt settlement services to include commercial financing recipients and debtors.

What This Bill Does

It prohibits companies from engaging in false, deceptive, or misleading acts when providing debt settlement services.
It requires these companies to provide clear information to customers before they sign any contracts.
It allows consumers to cancel a contract at any time without paying extra fees.
It mandates that if someone cancels, the company must inform them of all transactions within three business days.

Who It Names or Affects

People who use debt settlement services
Commercial financing recipients
Debtors

Terms To Know

debt settlement provider: A company that helps people settle their debts for less than what they owe.
commercial financing recipient: Someone who gets money from a commercial lender to buy goods or services.

Limits and Unknowns

The bill does not specify how the new protections will be enforced.
It is unclear what specific changes are made beyond expanding protection for certain groups.

Bill History

2025-08-29 California Legislative Information
In committee: Held under submission.
2025-08-18 California Legislative Information
In committee: Referred to suspense file.
2025-07-16 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. (Ayes 11. Noes 1.) (July 15). Re-referred to Com. on APPR.
2025-07-07 California Legislative Information
Read second time and amended. Re-referred to Com. on JUD.
2025-07-03 California Legislative Information
From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 5. Noes 2.) (July 2).
2025-06-12 California Legislative Information
In committee: Hearing postponed by committee.
2025-05-28 California Legislative Information
Referred to Coms. on B. & F.I., JUD. and APPR.
2025-05-15 California Legislative Information
In Senate. Read first time. To Com. on RLS. for assignment.
2025-05-15 California Legislative Information
Read third time. Passed. Ordered to the Senate. (Ayes 73. Noes 0. Page 1560.)
2025-05-07 California Legislative Information
Read second time. Ordered to third reading.
2025-05-06 California Legislative Information
From committee: Do pass. (Ayes 9. Noes 0.) (May 5).
2025-03-13 California Legislative Information
Referred to Com. on B.&F.
2025-02-24 California Legislative Information
Read first time.
2025-02-22 California Legislative Information
From printer. May be heard in committee March 24.
2025-02-21 California Legislative Information
Introduced. To print.

Official Summary Text

AB 1166, as amended, Valencia.
Fair Debt Settlement Practices Act.
Existing law, the Fair Debt Settlement Practices Act, prohibits a debt settlement provider from engaging in false, deceptive, or misleading acts or practices, as specified, when providing debt settlement services. Existing law requires a debt settlement provider to provide a consumer with certain disclosures along with an unsigned copy of the proposed written contract between the debt settlement provider and the consumer and prohibits certain unfair, abusive, or deceptive practices in connection with payment processor activities. Existing law authorizes a consumer to terminate a contract for debt settlement services at any time without a fee or penalty of any sort by notifying the debt settlement provider, at which time the debt settlement provider is required to, among other things, provide, within 3 business days, a detailed accounting of any amounts received or expected to be
received by the debt settlement provider from the consumer’s settlement account after the debt settlement provider received effective notice of request for cancellation. Existing law authorizes a consumer to bring a civil action for violation of these provisions.
This bill would expand the protections for consumers described above to include commercial
financing recipients,
debtors,
as defined, and make other, nonsubstantive and related changes.

Current Bill Text

Read the full stored bill text

Download Bill PDF