Student loan servicing.

Plain English Breakdown

The official source material does not provide specific details on enforcement costs and the exact impact of the bill once signed into law.

Student Loan Servicing Rules

AB-866 makes student loan servicers in California follow the Unfair Competition Law and includes student loans under the Rosenthal Fair Debt Collection Practices Act.

What This Bill Does

• Makes sure that companies servicing student loans in California must also follow the Unfair Competition Law (UCL).
• Adds student loans to the list of debts covered by the Rosenthal Fair Debt Collection Practices Act, which stops abusive debt collectors.

Who It Names or Affects

• Student loan servicers in California
• People who have student loans and might face unfair debt collection practices

Terms To Know

Unfair Competition Law (UCL)

A law that stops businesses from doing things that are not fair or honest.

Rosenthal Fair Debt Collection Practices Act

A law that protects people from unfair and abusive debt collection practices.

Limits and Unknowns

• Doesn't say exactly how much it will cost to enforce these rules.
• The bill passed the Legislature but hasn't been signed into law yet, so its full effect is not clear.

Official Summary Text

AB 866, as introduced, Ortega.
Student loan servicing.
Existing law, the Student Loan Servicing Act, prohibits a person from engaging in the business of servicing a student loan in California without first obtaining a license. Existing law commits the administration of these provisions to the Commissioner of Financial Protection and Innovation and grants the commissioner various powers in this regard, including the authority to conduct investigations of applicants and licensees.
Existing law, the Unfair Competition Law (UCL), makes various practices unlawful and makes a person who engages, has engaged, or proposes to engage in unfair competition liable for a civil penalty, as specified. Existing law authorizes actions for relief prosecuted under the UCL to be brought by certain public attorneys and requires the penalty collected from those actions to be paid to the treasurer of
the county or city in which the judgment is entered, as specified.
This bill would specify that a student loan servicer under the Student Loan Servicing Act, is subject to the UCL.
Existing law, the Rosenthal Fair Debt Collection Practices Act, regulates the collection of consumer debts by debt collectors, as defined. Under existing law, a debt collector who violates the act is liable to a debtor for actual damages resulting from the violation, and is subject to additional civil penalties for any willful or knowing violation of the act, and other specified remedies. Existing law also makes certain violations of the act punishable as a crime.
The bill would specify that a student loan is a debt that is subject to the Rosenthal Fair Debt Collection Practices Act. The bill would further specify that a transaction giving rise to a student
loan is a consumer credit transaction for purposes of the Rosenthal Fair Debt Collection Practices Act. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Current Bill Text

Download Bill PDF