AB 2705 Could Leave More Californians Without the Money They’re Owed

Critics argue that California’s AB 2705 could make it harder for individuals and small businesses to recover unpaid debts, potentially limiting access to funds they are legally entitled to collect.

By Julian Canete, Special to California Business Journal

California lawmakers rightly want to protect consumers. But when good intentions overlook how a system actually functions, the result can be fewer protections for California consumers.

That is the concern with Assembly Bill 2705 (Dixon), a bill that seeks to limit the fees charged by professionals who help people recover tax sale excess proceeds. While the idea may sound reasonable, the bill risks creating more barriers for Californians to recover money that already belongs to them.

Every year, millions of dollars sit unclaimed in county government accounts because the rightful owners cannot be found. People move. Families lose touch. Businesses close. Records become outdated. Homes go into foreclosure. In many cases, heirs have no idea that funds exist. As a result, money that should be returned to Californians remains untouched.

That is where professional recovery specialists come in.

These professionals do much more than fill out paperwork. They track down individuals and heirs, conduct genealogical research, navigate probate issues, locate missing records, and help claimants overcome complex administrative hurdles required to recover funds. They typically work on a contingency basis, meaning they are only paid if they successfully recover money for the claimant.

Without such work, many people would never know their funds existed.

Supporters of AB 2705 argue that limiting fees will protect consumers from excessive charges. But that argument overlooks a more important question: What happens if nobody is available to help consumers recover their money in the first place?

A person who receives a portion of funds they never knew existed is better off than receiving nothing at all because the money was never found or claimed. That reality drives many contingency-based services across the economy. Consumers voluntarily choose whether the assistance provided is worth the cost because the alternative may be receiving nothing.

The bill also assumes that fee caps are an effective form of consumer protection. They are not.

California regulates countless industries through licensing requirements, oversight, insurance requirements, enforcement actions, and penalties for misconduct. These safeguards focus on behavior and accountability. They punish bad actors while allowing legitimate professionals to continue serving consumers.

Fee caps provide none of those protections.

A dishonest operator is unlikely to become ethical simply because compensation is restricted. Meanwhile, legitimate professionals who invest significant time and resources into locating rightful owners may find it economically impossible to continue taking on difficult cases. The more complex the claim, the greater the risk that no one will be willing to do the work.

The result? Fewer professionals helping Californians recover funds, fewer successful claims, and more money sitting unclaimed that gets deposited into county general funds after just one year.

If lawmakers are concerned about protecting consumers, there are better options. Licensing standards, registration requirements, bonding, insurance, complaint processes, and anti-fraud enforcement would provide meaningful safeguards without reducing access to legitimate recovery services. These approaches target misconduct rather than eliminating the economic incentives that make recoveries possible.

Consumer protection should not be measured solely by what someone pays for a service. It should be measured by whether consumers ultimately receive the money that is rightfully theirs.

Before moving forward with AB 2705, lawmakers should carefully consider whether the bill solves a problem or creates a much larger one. Because if fewer professionals can help Californians recover tax sale excess proceeds, the people who stand to lose the most are the very consumers the bill is intended to protect.