AFSA Vetoes Commercial Collections
AFSA’s State Government Affairs team sent a veto letter to California Governor Gavin Newsom in opposition to commercial collections Senate Bill 1286. This bill addresses small business debt and a collections law, the Rosenthal Fair Debt Collection Practices Act. with which the creditors must comply.
The state wants to expand the Rosenthal Act to cover commercial collections, and AFSA has been fighting for exemptions that would cover floor-planning members. The veto letter highlights key issues with SB 1286, noting that it disrupts essential communication between floorplan lenders and motor vehicle dealers, potentially harming their effective working relationship.
The bill’s unclear definition of “total value of credit” creates complications for open-end credit lines, where borrowing often exceeds the contractually specified limit. The governor’s proposed exemption for lines of credit exceeding $500,000 does not fully address the needs of our members in the independent sector who are engaged in floor planning. This threshold does not align with the broader requirements and challenges faced by our members, indicating a need for a more comprehensive solution. Additionally, the bill’s restriction on where judicial proceedings can be filed makes collateral recovery more difficult, which could negatively affect lending practices.
AFSA urges a veto of the bill in its current form, as the problems with it have not been adequately addressed.
This veto letter, along with SGA’s other recent letters, can be found on the direct advocacy section of AFSA’s website.
September 12th, 2024
