California DFPI Sanctions Debt Collector


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The agency’s first enforcement action under the California Consumer Financial Protection Law targets a debt buyer’s violations of the CCRAA and the FDCPA.

9/29/2021 8:00

The California Department of Financial Protection and Innovation (DFPI) filed a desist and refrain order and assessed civil penalties against California-based debt collector and debt buyer F&F Management on Sept. 22. This is the first enforcement action the DFPI has issued against a debt collector for violating the recently enacted California Consumer Financial Protection Law (CCFPL).

According to the order, F&F violated California and federal law by:  

  1. Debt parking, i.e., furnishing negative credit information for consumer debts allegedly owed by consumers in multiple states without first providing the consumers with 30 days’ notice as required by Civil Code section 1785.26, subdivisions (b) and (c) of the California Consumer Credit Reporting Agencies Act (CCRAA).
  2. Leaving a non-compliant voicemail message without disclosure of the debt collector’s identity or basic information about the debt, in violation of Civil Code section 1788.11, subdivision (b), of California’s Rosenthal Act.

Additionally, the DFPI implies that F&F violated Section 808 of the Fair Debt Collection Practices Act [15 U.S.C Section 1692f] by attempting to collect unsubstantiated debt and unsubstantiated charges.

Finally, the DFPI concluded that F&F failed to provide the written notice required by FDCPA Section 809 [15 U.S.C 1692g] and, in some cases, continued to attempt to collect debts despite having received letters from consumers sent via certified mail requesting validation pursuant to 1692g and, moreover, told consumers (including those that had requested validation) that their charges would multiply significantly if they failed to promptly pay.

The DFPI levied a $375,000 administrative penalty against F&F, which F&F must pay by Oct. 22. 

“This action highlights just some of the unlawful and unfair acts that can cause enormous harm to consumers and plague the debt collection industry, and the ways the DFPI can address them,” said DFPI Senior Deputy Commissioner of the Consumer Financial Protection Division Suzanne Martindale in a press release.

The company is required to desist and refrain from unlawful acts or practices associated with the FDCPA, the Rosenthal Fair Debt Collection Practices Act and the CCRAA.

If there are bad actors engaging in activities that harm consumers, ACA is eager to support all efforts to weed them out.

Read the DFPI’s complete order here.

California Licensing and Draft Regulations

Meanwhile, the DFPI continues to seek comments on the CCFPL and the Debt Collection Licensing Act (DCLA) by Oct. 5, ACA previously reported.

On April 8, 2021, the commissioner of the DFPI initiated a rulemaking to adopt regulations related to the requirements for licensure under the DCLA. The commissioner is now considering a second rulemaking to adopt regulations related to other provisions of the DCLA, including its scope, annual reports and bond amounts.

The commissioner invites interested parties to provide input in developing regulations related to these topics and has formulated questions to assist such parties in providing this input. The commissioner also invites interested parties to provide example language for regulations related to these topics.

Agencies also need to be aware of new California licensing requirements under the DCLA requiring California debt collectors and buyers to apply for a license from the DFPI by Dec. 31, 2021.

The licensing application is now available on the Nationwide Multistate Licensing System website, ACA previously reported.

The 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.

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

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