Apply for California Debt Collection License by Dec. 31

ACA’s licensing team has resources to help with the state’s new licensing application required for collectors before the end of the year.

12/07/2021 1:15 PM

2 minute read

California became the latest state to require debt collection licenses this year and the deadline to apply is quickly approaching.

The Debt Collection Licensing Act (DCLA), which takes effect Jan. 1, 2022, requires any person engaging in the business of debt collection in California to be licensed by the California Department of Financial Protection and Innovation (DFPI).

The good news is if you apply now, agencies may continue operating as a debt collector in California while applications are pending. If you apply after Dec. 31, 2021, you will be required to wait for the issuance of a license before you can operate in California, according to the DFPI.

ACA International’s licensing team has resources to help members navigate the licensing process.

“We’ve known this has been coming for some time and can walk members through the steps to apply for their license and make sure they know the DFPI’s requirements,” said Licensing Manager Angela Butera.

The following persons are required to obtain a license to engage in the business of debt collection in California pursuant to the DCLA:

  • Any person who, in the ordinary course of business, regularly, on the person’s own behalf or on behalf of others, engages in debt collection.
  • Any person who composes and sells, or offers to compose and sell, forms, letters and other collection media used or intended to be used for debt collection.
  • Any person who engages in the business of a debt buyer. A debt buyer is any person or entity who regularly engages in the business of purchasing charged-off consumer debt for collection purposes, whether it collects the debt itself, hires a third party for collection, or hires an attorney-at-law for collection litigation.

Surety bonds must be submitted with license applications. Debt collectors must maintain a surety bond in a minimum amount of $25,000 payable to the Commissioner of the California Department of Financial Protection and Innovation and issued by an insurer authorized to do business in California.

The DFPI is expecting to license thousands of entities over the next two years. To avoid missing important updates, interested parties are encouraged to check the DFPI website periodically and subscribe to the DFPI’s email subscription service.

Visit the DFPI’s debt collectors web page and FAQs for more information.

Licensing renewals are also due in most states that require licenses Dec. 31.

The Nationwide Multistate Licensing System offers free online courses and state-specific checklists to guide licensees through the process, available on the Annual Renewal page of the NMLS Resource Center. The renewal period in most states runs Nov. 1 to Dec. 31.

ACA will also present more information on California’s recent regulations on the Dec. 29 ACA Huddle.

June Coleman, of counsel at Messer, Strickler, Burnette Ltd., Cindy Yaklin, president of States Recovery Systems Inc., and Kelly Parsons-O’Brien, collections manager at Pacific Credit Services, will help members understand the new regulatory laws that are taking effect in California on Jan. 1, including the DCLA.

Visit the ACA Huddle webpage to complete a one-time registration for the ACA Huddle and access recordings of the ACA Huddle presentations.

For more information on how the ACA licensing staff can assist with your licensing application completion needs, please contact us at [email protected] or call (952) 926-6547.

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