Updated Debt Collection and Private Student Loan Bills Headed to Governor’s Desk in California


Legislation was the focus of California Association of Collectors Inc. during the state’s legislative session. Licensing and regulation progress for debt collectors also continues in California.

9/27/2021 9:30

California’s legislative session for 2021 is over and two bills impacting the accounts receivable management industry are headed to the governor’s desk in the coming weeks.


The first of the two bills, expected to be signed by the governor, expands the scope of the Fair Debt Buying Practices Act of 2013 to focus on third-party debt collection agencies, said Andrew Madden, ACA International’s vice president of state unit and government affairs.


S.B. 531, sponsored by State Sen. Bob Wieckowski, D-Fremont, would require third-party agencies collecting on assigned debt to provide, when requested and within 30 days, a statement including information on the balance of the account and the reason behind interest and fees, Madden said. The agency would also have to provide a date of when the last payment was made by the consumer and when the debt became delinquent.


It would also prohibit a debt collector from making a written statement to a consumer in attempt to collect a delinquent consumer debt unless the third-party agency has access to a contract or other evidence showing that a debt is owed, Madden said.


There are exemptions within this legislation, however, if the agency does not have a signed contract or if it is for revolving debt.


“S.B. 531 was a priority for the California Association of Collectors when it was introduced and there were a fair number of amendments to ensure requirements that could only apply to  purchased debt would not apply to assigned debt,” Madden said.

Private Student Loan Collection Reform


California’s legislature also enacted the Private Student Loan Collection Reform Act, A.B. 424, sponsored by State Assemblymember Mark Stone, D-Monterey Bay.


The legislation places new documentation requirements on private student loan lenders before initiating any collection activity, Madden said. It also requires student loan settlements by private student loan lenders and debt collectors to be done in open court.


California Licensing and Draft Regulations


Meanwhile, the California Department of Financial Protection and Innovation (DFPI) continues to seek comments on the recently enacted California Consumer Financial Protection Law (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.

“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.

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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