Selected Developments in Business Law — Debt Collection Practice in California

Courtesy of CEB, we are bringing you selected legal developments in areas of California business law that are covered by CEB’s publications. This month’s feature is from the forthcoming April 2026 update to Debt Collection Practice in California. References are to the book’s section numbers. Legal developments covered include the Trump administration’s regulatory changes affecting the Consumer Financial Protection Bureau (CFPB), extensive developments affecting the Fair Debt Collection Practices Acts, the impact of the U.S. Supreme Court’s McLaughlin Chiropractic v. McKesson opinion on interpretation of the Telephone Consumer Protection Act (TCPA), and more.

April 2026 Update

Due to a change in CEB policy, all images of publicly available third-party forms, such as Judicial Council forms, have been deleted throughout the book. Internet links to forms are provided where available.

Chapter 1: Representing the Creditor

A California court held in Chai v Velocity Investments, LLC (2025) 108 CA5th 1030 that under California’s Fair Debt Buying Practices Act (FDBPA), concrete harm is not necessary for standing. The penalty provision of the FDPBA provides independent standing under state law. The court distinguished the Limon case, which had held the opposite for the Fair Credit Reporting Act (FCRA). See §§1.42, 2.20. For a listing of additional recent cases in accord with Chai, see §2.49.

Chapter 2: The Fair Debt Collection Practices Acts

In People v Superior Ct (Credit One Bank N.A.), the court noted that California’s Department of Financial Protection and Innovation (DFPI) is not immune from the Civil Discovery Act. See §2.1.

A recent case, Augustus v Mercedes-Benz, adds to the list of those emphasizing that the federal Fair Debt Collection Practices Act (FDCPA)’s exclusion of creditors from the definition of “debt collector” can be used to resolve a case at the preliminary stage. See §2.10.

Two recent cases, Garcia v Navy Federal Credit Union and Brown v EdFinancial, reinforced that California’s Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) does not apply to debt servicing on accounts that are merely delinquent, rather than in default. Renault v AvalonBay Communities reiterated that residential rent payments are not credit transactions subject to the Rosenthal Act. See §§2.14, 2.20.

The FDCPA’s requirement that a debt collector must cease communications with a debtor once the debtor provides notice the debtor refuses to pay is not triggered if the debtor buries the cease-and-desist in a poem, or in a 7-paragraph Christmas letter. See §2.31.

Allegations a debt collector’s email counts as prohibited violence or threat of violence under the FDCPA and Rosenthal Act were rejected in Turner v Halsted Financial Services. See §2.33.

In Six v IQ Data International, the Ninth Circuit found that a consumer’s alleged receipt of an unwanted debt verification letter was a concrete injury that could support Article III standing. See §2.33.

Even though as a matter of statutory interpretation no statutory penalty can be imposed under the Rosenthal Act without actual damages having been incurred, in Kashanian v National Enterprise Systems, a Court of Appeal found a debt collector’s statutory violation of the Rosenthal act was sufficient to confer standing on a consumer, regardless of whether or not there were actual damages. See §2.51.

Chapter 2A: The Consumer Financial Protection Bureau

The discussion of judicial challenges affecting the CFPB (such as Loper Bright) has been revised and updated. See §2A.1A.

 New section §2A.1A1 discusses in detail the executive and administrative regulatory measures and changed enforcement priorities affecting the CFPB under the second Trump administration. See also §§2A.1C, 2A.1E, 2A.11A, 2A.12-2A.15.

The discussion of CFPB consumer complaints has been revised and updated. See §2A.1D.

New section §2A.17A discusses state enforcement of the federal Consumer Financial Protection Act, particularly of interest given the change in federal enforcement priorities.

Chapter 2B: The Telephone Consumer Protection Act

Chap 2B has been revised and updated to reflect the Supreme Court’s ruling in McLaughlin Chiropractic v McKesson regarding FCC rulings under the TCPA. See §§2B.2, 2B.7, 2B.24, 2B.25, 2B.31, 2B.85.

The meaning of “express consent” under the TCPA is now deeply in flux. See §2B.25.

See  §2B.44, 2B.44C for recent debt-collection cases involving ATDS claims.

As this book was going to press, the Ninth Circuit held in Healy v Milliman that absent class members must demonstrate Article III standing at the summary judgment stage. See §2B.78.

Chapter 2C: Privacy Laws Affecting Debtors and Debt Collection

Chap 2C has been extensively revised and updated. See, e.g., §2C.18 for discussion of an emerging out-of-circuit standard defining actionable inaccuracy under the Fair Credit Reporting Act.

Chapter 2D: The California Department of Financial Protection and Innovation

The discussion at §2D.1 on state enforcement of the federal Consumer Financial Protection Act has been revised and updated.

Regulations effective in February 2025 required, for the first time, registration by companies providing a variety of consumer financial services. See §2D.2.

New section §2D.4A, and revised and updated section §2D.5, discuss DFPI enforcement actions, orders, and judgments.

Other Chapters:

Effective January 1, 2027, a new “three attempts on three different days at three different times” standard for reasonable diligence will apply to service of process, with additional requirements in an action to collect consumer debt. See §4.5.

In judicial trials, judgments entered under the terms of a settlement are currently entered immediately upon filing of the court’s decision and may be enforced immediately once entered. Effective January 1, 2027, new timing requirements will apply for entry of such judgments, depending on whether or not a statement of decision was requested. See §§4.131, 7.10, 7.12, 7.27.

Effective January 1, 2027, a party to an action will be able to move to vacate a default judgment that is void for lack of proper service at any time after entry of judgment. See §4A.2.

Talbott v Ghadimi described a split of authority regarding relief from default or default judgment for attorney neglect. See §4A.13.

R&J Sheet Metal v O’Neil distinguished the Duke decision (levy can in certain circumstances support a cause of action for conversion) as one involving self-help rather than, as in O’Neil, a court’s determination of proportionate liability pursuant to ordering a contribution to remedy the excessive levy. See §§4A.51, 7.63.

A debtor may make a claim of exemption more than 20 days after service for personal debt, although funds may still be released to the judgment creditor following the 20-day period. See §§4A.52, 4A.54A, 4A.56, 9.56.