There have recently been a number of companies that specialize in child support collections that have emerged promising faster and better services than state child support agencies provide. These private child support collection agencies contract with custodial parents to collect their child support in exchange for a percentage of the child support collected. These agencies generally take as their payment one-third or more, plus contractual fees, of all the collections they make on behalf of a child. These private child support collectors are entirely unregulated and are not subject to the Rosenthal Fair Debt Collection Practices Act or federal laws.
Along with the growth of private child support collectors there has been a rise of complaints from both custodial and noncustodial parents about their business practices that include misleading contracts, harassment of employers, family members and neighbors, and hidden and exorbitant contingency fees. The contracts often authorize the taking of a childís monthly current support payment as a payment toward child support arrears leaving the child with only a percentage of his or her payments.
Child support payments are intended to ensure that children have the support they are legally entitled to meet their most basic needs. Private child support collectors should not take those monthly payments for their own profits.
AB 2781 imposes reasonable consumer protections for the families and children that are entitled to child support payments. The bill:
- Provides basic consumer protections to families such as requiring contractual disclosures and prohibiting private child support collection agencies from engaging in practices prohibited by the Rosenthal Fair Debt Collections Practices Act. This helps parents be informed about their choices.
- Prohibits a private child support collector from establishing a contract if a wage withholding order has been in place for the previous six months. This protects against contracts being established where the work of finding the non-custodial parent has been done by someone other than the contracted collection agency. By doing this, it protects custodial parents from paying fees unnecessarily.
- Requires that the noncustodial parent be liable for a percentage of the fees charged by the private child support collector for collection activity. This means that the custodial parent does not have to bear the full costs of the noncustodial parentís failure to pay child support.