The California Fair Debt Collections Practices Act also known as the Rosenthal Act regulates what debt collectors and creditors can do when attempting to collect debts. Since it was first passed it only regulated the collection of consumer debts. 

However, as of July 1, 2025, the Rosenthal Act now regulates collection with regards to some business debts. 

The types of business debts that are now covered by the Rosenthal Act are defined as a "covered commercial debt." The criteria for what constitutes a covered commercial debt is found in Civil Code Sec. 1788.2(n). To be a covered commercial debt under the act the debt must be owed by a natural person and in an amount of $500,000 or less. The $500,000 limit is to be calculated at the time the transaction is entered into or when a debt buyer acquires the rights. 

By expanding the definition of a covered debt it is now prohibited for a debt collector to call a debtor with unreasonable frequency which rises to the level of harassment. It is also prohibited to use certain false representations in connection with a covered business debt. Such false representations now outlawed are that any person is an attorney or counselor at law. 

If a collector tries to collect on a time-barred debt they must include a specific disclaimer. Importantly, it is also a violation of the Rosenthal Act for a debt collector to attempt to collect a debt if they are aware service of process has not been legally effected. These are just some of the prohibited conduct when attempting to collect a debt. There are many other provisions. 

These new protections will help alleviate the stress small business owners faced when they encounter financial difficulties. It will also provide consumer attorneys the potential to bring claims against harassing debt collectors of business debt. If you are being harassed or misled by a collector with regard to your business debts please feel free to contact our firm for a free consultation.