California Debt Collection License Applications Will Be Available Sept. 1


Applications required under the state’s new licensing law are due Dec. 31. The debt collection advisory committee, which includes several ACA members and was created under the law, will meet July 28.

7/16/2021 11:00

The California Commissioner of the Department of Financial Protection and Innovation (DFPI) announced Friday that license applications required under the Debt Collection Licensing Act will be online through the Nationwide Multistate Licensing System & Registry (NMLS) Sept. 1. Applications will be due by Dec. 31, 2021, and required starting Jan. 1, 2022.

The Debt Collector 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 DFPI.

The DCLA (S.B. 908), from California State Sen. Bob Wieckowski, D-Fremont, was signed into law by Gov. Gavin Newsom in September 2020, as was legislation to create the DFPI—essentially a state version of the Consumer Financial Protection Bureau. The DFPI includes oversight of debt collectors and emerging financial technology products, ACA International previously reported.

The application will request financial and other licensee information and will need to be submitted via the NMLS. In addition, applicants will need to submit fingerprints through the California Department of Justice’s electronic fingerprint submission Live Scan Service.

Applicants 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.

The DFPI also reports that licensees interested in continuing their operations in California starting Jan. 1, 2022, should start gathering materials necessary to apply now to ensure they are ready when the applications are available. Failure to apply by the deadline and continued operation without a license may result in enforcement actions.

Meanwhile, the DFPI commissioner  has issued proposed changes to a notice of rulemaking to adopt the license application and procedures for applying for a debt collection license under the DCLA, ACA previously reported.

Additions to the proposed regulations are shown in double underline and deletions are shown in single strikeout. The California Association of Collectors Inc. (CAC), which worked closely with Wieckowski and his staff to amend S.B. 908 and subsequently supported the bill, is now advocating for changes to align proposed collection agency licensing requirements with the new state law.

The CAC responded to the DFPI’s proposals on the definition and registration of a branch office, working with vendors and surety bonds, among others, in comments filed with the agency in June.

The DFPI expects the final rules on licensing, if adopted, will take effect on or around Nov. 19, 2021. The commissioner also expects to adopt additional regulations in 2022 in a separate rulemaking that would specify, among other things, the requirements for maintaining books and records, and surety bonds based on a licensee’s volume of debt.

The DFPI’s new debt collection advisory committee, also created under the DCLA, will holds its first meeting July 28.

Several ACA members were appointed to the committee, including Tamar Yudenfreund, senior director, public policy at Encore Capital Group and chair of ACA’s federal affairs committee; Scott Hyman, attorney with Severson & Werson PC; Mark Naiman, president of Absolute Resolutions Corp.; Cindy Yaklin, president of States Recovery Systems Inc. and the California Association of Collectors Inc. (CAC); and Ohad Samet, president of TrueAccord Corp.

The seven-member committee will provide critical feedback to the DFPI as it creates its debt collection licensing program.

Visit the DFPI’s Debt Collectors web page and FAQ for more information.

Licensees and interested applicants are also encouraged to check the DFPI website periodically and subscribe to the DFPI’s email subscription service

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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