SB 1286 Expands Rosenthal Act to Cover Commercial Debt, Provides New Protections for Small Business Debtors

On September 24, 2024, California enacted Senate Bill 1286, a transformative update to the Rosenthal Fair Debt Collection Practices Act (RFDCPA), bringing robust consumer protections into the realm of commercial debt collection. The key change to the law, effective as of July 1, 2025, is that individuals who take on commercial debt or personally guarantee business debt gain protection under the RFDCPA, provided certain criteria are met.

Learn more below about how SB 1286 changes the landscape of commercial debt collection in California. If you are a small business owner dealing with unfair debt collection practices in Oxnard, Camarillo, or surrounding areas in Southern California, contact Rounds & Sutter, LLP, to speak with our Ventura commercial debt collection defense lawyers.

Why the Expansion Matters

Historically, business debts were excluded from protections under both the federal Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Act. Many small business owners rely on personal guarantees to secure financing, only to face intense pressure from creditors and collection agencies down the road. SB 1286 acknowledges their vulnerability to unfair collection practices and extends protections accordingly.

Who Is Covered and When

SB 1286 applies to “covered commercial debts,” defined as money owed by a natural person, or a natural person who guarantees a business debt—like the owner of a sole proprietorship or a personal guarantor—even if the primary borrower is a business entity.

The total of all commercial transactions, including those new and previously existing with the same creditor, must be $500,000 or less to qualify for protection under the Act.

Importantly, SB 1286 applies to debts that are entered into, renewed, sold, or assigned on or after July 1, 2025. That means debts created before that date, but transferred later, can also become subject to this law.

Protections Now Extended to Commercial Debts

Now that SB 1286 has taken effect, collection of covered commercial debts is governed by the full suite of Rosenthal Act safeguards. Consequences of violating the law include actual damages, statutory penalties up to $1,000 for willful violations, and assessment of the other party’s attorney’s fees.

Protections under the law extended to commercial debtors now include:

• Anti-harassment measures — prohibiting threats, obscene or repetitive calls, or misleading information about the caller’s identity.
• Prohibition on deceptive communications — It is a crime to simulate judicial or government authority in collection attempts.
• Identity theft safeguards — Collectors must halt activities and investigate if the debtor claims identity theft.
• Validation and disclosure requirements — including debt validation and time-barred debt disclosures, just as with consumer debt.
• Proper jurisdiction rules — Any lawsuit must be filed in a county with a connection to the debtor or where the debt was incurred.

How California Law Compares to Federal Law

Under the federal FDCPA, legal protections only apply to consumer debts and only against third-party collectors, not original creditors. SB 1286 brings California’s consumer-level protections to certain commercial debts and applies them even to first-party collectors, such as lenders or finance companies themselves.

What This Means for Ventura County Small Business Owners and Guarantors

If you’ve personally guaranteed a business loan, lease, or other commercial obligation, or if you’ve borrowed funds for business purposes in your own name, and the transaction falls under $500,000, SB 1286 grants you legal protections previously unavailable.

As of July 1, 2025, the same rights consumers enjoy under California law, i.e., fair treatment, clear disclosures, and protection against deception, will extend to you. This shift levels the playing field, particularly for solo entrepreneurs or small business owners who often bear personal risk for business borrowing.

Practical Tips for Navigating SB 1286

While SB 1286 introduces meaningful protections, there are practical steps to consider:

• If you’re a commercial financer or creditor, begin reviewing your debt collection policies now. Policies must align with the Rosenthal Act starting now.
• If you’re an individual borrower or guarantor, monitor collection activity closely, especially for new debts originated, sold, or renewed after July 1, 2025. You may now have legal recourse if subjected to unfair practices.
• Keep documentation of communications, demanding proper validation when needed, and consult counsel if you suspect a violation.

Contact Rounds & Sutter for Commercial Debt Collection Defense in Ventura County

SB 1286 marks a landmark change in California’s debt collection landscape. By extending robust debt collection protections to certain commercial debts owed or guaranteed by individuals, California bridges a long-standing legal gap. For Ventura County’s small business community, this law offers greater fairness and clarity, empowering borrowers and guarantors alike to hold collection agents accountable to consumer-level standards.

At Rounds & Sutter, we’re dedicated to helping individuals and small business owners in Oxnard and Ventura County understand how SB 1286 affects your rights and obligations. Whether you’re dealing with collection notices now or planning for future obligations, we can help you navigate the new legal terrain with confidence. Contact us at our offices in Ventura or Westlake Village to discuss your needs.