CA AB1166

Expands the Fair Debt Settlement Practices Act to protect commercial debtors (businesses with debt of $500,000 or less and annual gross receipts at or below the state's small business threshold) in addition to individual consumers

Defines "commercial loan" as loans of $5,000 or more intended for business purposes, and "commercial debt" as money owed relating to such loans

Requires debt settlement providers to disclose that results are not guaranteed, credit scores may be negatively impacted, creditors may sue or garnish wages, and canceled debt may be taxable income

Prohibits debt settlement providers from collecting fees until a settlement is reached and the consumer or commercial debtor has made at least one payment; caps fees on commercial debt settlements to the amount saved through the settlement

Allows consumers and commercial debtors to terminate debt settlement contracts at any time without penalty, with providers required to provide detailed accounting within 3 business days and return settlement account funds within 7 days