The licensing requirements were posted in advance of the state’s new licensing application, which will be available Sept. 1
8/25/2021 10:30
The California Commissioner of the Department of Financial Protection and Innovation (DFPI) recently posted a checklist of requirements for the state’s debt collection licensing application on the Nationwide Multistate Licensing System (NMLS) website.
The licensing application will be available on NMLS starting Sept. 1, 2021, and due by Dec. 31, 2021.
The Debt Collection Licensing Act, which takes effect Jan. 1, 2022, requires any person engaging in the business of debt collection in California to be licensed by the DFPI.
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 for applying 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.
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.
Activities authorized under the license:
- Active debt buying
- First-party debt collection
- Third-party debt collection
- First mortgage servicing (only for collections for first mortgages the company holds/owns)
- Third-party first mortgage servicing (only for collections for first mortgages the company does not hold/own)
- Third-party subordinate lien mortgage servicing (only for collections for subordinate lien mortgage the company does not hold/own)
- Judgment recovery
Other debt prerequisites for license applications include a surety bond. Debt collectors must submit with the license application and 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.
Meanwhile, the DFPI continues to seek comments on the recently enacted California Consumer Financial Protection Law (CCFPL) and the DCLA, specifically on complaints and small business protections to help inform the department’s implementation of the California Consumer Financial Protection Law, ACA International previously reported.
Visit the DFPI’s Debt Collectors web page and FAQ for more information.
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.