We have a close friend, a seasoned general counsel in financial services regulation, who vividly describes the spread of consumer-style regulations into commercial products as a relentless, gelatinous monster—“The Blob.” In our friend’s view, The Blob is always expanding—never shrinking, never retreating. Its presence is constant with an insatiable drive to regulate and oversee every aspect of commercial transactions.
Case in point: earlier this week, California Governor Gavin Newsom signed legislation that will expand debt collection law to commercial finance products. Specifically, California Senate Bill 1286 expands the Rosenthal Fair Debt Collection Practices Act (California FDCPA), which includes creditors collecting their own debts, in several important ways.
The bill “recasts” the statute to reach “covered commercial debts,” defined as “money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person to a lender, a commercial financing provider, as defined in Section 22800 of the Financial Code, or a debt buyer, as defined in Section 1788.50, by reason of a covered commercial credit transaction.” “Covered commercial credit transaction,” in turn, means a “transaction between a person and another person in which property, services, or money, of a total value of no more than five hundred thousand dollars ($500,000), is acquired on credit by a person from the other person for use primarily for other than personal, family, or household purposes.”
More broadly, this bill expands the protections afforded by the California FDCPA to a large number of small business finance products. This includes things like disclosures for time-barred debts, anti-harassment provisions, and protections for the victims of identity theft.
News and views
Speaking of “The Blob,” the Consumer Financial Protection Bureau recently announced a “Beta” platform for testing and uploading Dodd-Frank Section 1071 reportable data. The Bureau has also issued a Filing Instructions Guide that walks covered financial institutions through the procedures and processes for uploading data to be collected in 2025. This is a great reminder that if you have not started thinking about (a) your status as a potential covered financial institution under Section 1071 and (b) your compliance obligations and associated internal processes and procedures for compliance, then now is the time.
Check out our recent Section 1071 webinar, which is available for easy viewing on YouTube.
Our Husch Blackwell team is always interested in new and innovative ideas. We are looking forward to a webinar from The International Factoring Association featuring Bill Neville – Business Development Manager for the Entrust Group – who will be discussing how self-directed IRAs (SDIRAs) can be utilized for factoring receivables. According to the IFA’s announcement:
“For businesses with immediate cash flow needs, selling receivables to SDIRA investors can be a game-changer. In this webinar, Bill Neville from The Entrust Group will walk us through a comprehensive overview of SDIRAs. He will cover the various investment options, account types, and critical IRS regulations that govern these powerful investment accounts. Plus, he’ll explore why SDIRA investors could be the perfect untapped pool for meeting your factoring needs. Whether you’re a business owner looking to enhance cash flow or an investor seeking new tax-advantaged opportunities, this session will provide the insights you need to leverage SDIRAs for maximum impact in the private market.”
The webinar is scheduled to take place Wednesday, October 23 from 11am – 12pm PDT.
News you can bank on
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