Countdown to California License Application Deadline: ACA Has Resources to Help

laptopCalifornia Department of Financial Protection and Innovation reminds debt collectors to apply for a license by Dec. 31 to continue operating next year.

12/21/2021 1:00 PM

3.5 minute read

Dec. 31, 2021, the deadline to apply for a license now required by the California Debt Collection Licensing Act (DCLA), is fast approaching—but if you’re not one of the approximately 600 applicants on the books so far, there is still time to complete the process.

The California Department of Financial Protection and Innovation (DFPI) met with the Debt Collection Advisory Committee, including ACA International members, Dec. 16 and provided an update on the licensing process.

Melinda Lee, deputy commissioner, debt collector licensing with the DFPI, said there are updated Frequently Asked Questions (FAQs) on the debt collector licensing webpage and the department expects the approval process to continue through 2022 and possibly 2023.

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.

The department says applicants should not be concerned if they do not receive a response about their license for an extended period of time.

All debt collectors and debt buyers operating in California are required to apply for a license with the department. A license is required for the licensee’s principal place of business and cannot be transferred or assigned. A separate license is not required for each individual branch office, however, branch offices must be registered in the Nationwide Multistate Licensing System (NMLS.) The licensing application is available on the NMLS website.

ACA’s licensing team is also available to help answer questions on the application process and provide resources before Dec. 31. Visit ACA’s licensing website, email [email protected] or call (952) 926-6547.

“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.

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 DFPI and issued by an insurer authorized to do business in California.

Application Submitted … Now What?

Applicants who submit their materials by Dec. 31 are encouraged to sign up for the DFPI email subscription service for updates.

DFPI officials are also available to answer questions, but noted during the meeting that more complex questions will take longer for a response.

Applications from new debt collection agencies that have never operated in California will be reviewed by a separate team than those reviewing the applications from agencies that can continue to operate their business while their application is considered, Lee said.

The DFPI also encourages license applicants to access sample licensing forms available through the NMLS Laws and Regulations – Debt Collection Licensing Act page to show their license is pending.

California Updates Coming to the ACA Huddle

ACA will also present more information on California’s 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.

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

The NMLS 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.

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