ASSEMBLYMEMBER TED LIEU
53RD ASSEMBLY DISTRICT
For Immediate Release: February 25, 2008
Contact: David Ford
Phone: (916) 319-2053

Assemblymember Lieu Introduces Legislation to Cleanup Credit Counseling and Debt Settlement Industry

(Sacramento, CA) - Assemblymember Ted Lieu (D-Torrance) recently introduced legislation that would require the licensing of credit counseling programs and other entities offering debt relief and debt management advice. AB 2611 would give more consumer protection to people seeking help with resolving debt issues, which until now have been completely unregulated.

Under current law, debt settlement providers, credit counselors and debt management organizations are not licensed or regulated. The Financial code only requires the registration of non-profit credit counselors with the Department of Corporations (DOC). However, the extent of oversight is limited to registration only. AB 2611 would create a licensing program for credit counselors and debt managers, holding these companies accountable to those who seek their help.

“Many Californians depend on these corporations and entities to alleviate their dire financial situation,” stated Assemblymember Lieu. “It is imperative that these groups have some sort of oversight to ensure that the public is not being led into further financial trouble.”

AB 2611 not only requires these entities to become licensed with the DOC, but establishes consumer protections by requiring licensees to follow a series of best practices, as well as, strong consumer disclosure, and legal remedies. These groups would have to disclose previously hidden fees and charges to their customers and must carry insurance bonds. This legislation also gives DOC the authority to seek restitution to victims and to issue cease and desist orders to those engaged in unlicensed activity.

“With the expanding amount of credit being used and less people depending on savings, there is a great need for these types of services,” said Assemblymember Lieu. “This bill would ensure that when people do go for help, they are being advised by licensed professionals.”

This bill will be heard in policy committees in the upcoming months.