Staying Compliant with California's Expanded Rosenthal Act: How Tesorio Can Help Protect Your Business
Think commercial collections aren’t subject to consumer debt laws? Think again.
Starting July 1, 2025, California’s Rosenthal Fair Debt Collection Practices Act will expand to cover commercial debt collection, and your business needs to be ready.
California Senate Bill 1286 represents the most significant expansion of debt collection regulations in decades, extending consumer-style protections to business-to-business collections. For companies collecting on commercial invoices in California, this means new compliance requirements that could expose your business to costly violations if not properly managed.
The good news? If you're already using Tesorio for your accounts receivable management, you're closer to compliance than you might think.
What's Changing on July 1, 2025
The expanded Rosenthal Act will now cover “covered commercial debt”—any business-purpose debt of $500,000 or less owed by an individual (referred to legally as a “natural person”), including personal guarantors of business loans. This means that invoices tied to sole proprietors, independent contractors, or personally guaranteed commercial agreements will now fall under strict debt collection rules.
Key implications for your collections team:
- Your in-house A/R staff are now considered "debt collectors" under California law
- Harassment and deception rules that previously applied only to consumer debt now extend to commercial collections
- New record-keeping requirements with a four-year retention period
- Specific communication time restrictions and cease-communication protocols
The Four Essential Compliance Guardrails
To stay compliant with the expanded Rosenthal Act, your collections process must include these mandatory safeguards:
1. Time-Based Communication Controls
All collection communications must occur between 8 AM and 9 PM in the debtor's local time zone. Communications outside this window are deemed "unusual or inconvenient" and are prohibited under federal law incorporated by the Rosenthal Act.
2. Cease-Communication Management
When a debtor sends a written notice requesting you to stop contacting them, all collection activities must immediately cease until narrow statutory exceptions apply. This requires robust workflow management to prevent violations.
3. Attorney-Only Routing
If a debtor is represented by legal counsel, all communication must go to the attorney, not the debtor.
4. Comprehensive Audit Trails
You must maintain immutable logs of every outbound contact and pause reason for four years to defend against potential Rosenthal Act civil claims.
How Tesorio Supports Your Compliance Efforts
Tesorio gives you built-in tools to manage these compliance requirements, without slowing down your collections process.
| Compliance Requirement | How Tesorio Helps You Stay Compliant |
|---|---|
| Time-Restricted Communication 8 AM – 9 PM local time only | Set collection campaign send windows to align email timing with the debtor local time and avoid after-hours violations |
| Cease-Communication Requests Immediate halt to outreach | Enforce cease-communication requests at the global level using the Customer Block List. This approach ensures coverage across all campaigns and reduces the risk of manual oversight. |
| Attorney Representation Communicate only with legal counsel if requested by debtor | Update contact records easily when a debtor notifies you of legal representation to ensure future communications are directed to their attorney |
| Four-Year Recordkeeping Audit trail of all contact attempts and pause reasons required | Log emails and notes automatically with time stamps to maintain a tamper-proof record for four years |
| Professional & Accurate Messaging Clear, compliant language | Customize templates to ensure respectful, compliant language that avoids a misleading or threatening tone. |
| Identification of Covered Commercial Debt Debts ≤ $500K from individuals | Use filters in Campaigns or Workflows to help identify “covered commercial debt”, such as accounts based in California with balances ≤ $500K. |
Tesorio: Your Partner in Regulatory Compliance
Regulatory changes like this don’t have to disrupt your A/R operation. With Tesorio, you can quickly adapt to evolving laws while maintaining professional, effective collections that protect your business and your team.
Want to stay ahead of these regulatory changes? Contact our team to learn how Tesorio can help you maintain compliant, effective collections with confidence.