Second DFPI Regulatory Proposal on Debt Collections Licenses


On July 15, California’s DFPI released draft text for a second regulatory proposal under the Debt Collection Licensing Act (DCLA) regarding the scope, annual report, and provisions for increasing the amount of debt collection obligations. DCLA.

Here are some examples of the proposed changes:

  • a new definition of “engaging in debt collection activity” which expressly includes advertising or offering another debt collection service;
  • an exclusion that employees of debt collectors are not required to be licensed if acting in the course of their employment with a California licensed debt collector;
  • the conditions under which a creditor, in his own name, requesting the reimbursement of a consumer debt resulting from a credit granted by the creditor could be considered to be carrying on a debt collection activity for the purpose of obtaining a license in California ;
  • disclosure requirements for annual reports; and
  • record-keeping requirements, including the requirement to keep records of any contact or attempted contact with anyone associated with a debtor account, regardless of who initiated the contact and whether the attempt was successful .

The DFPI Commissioner invites interested parties to submit their comments on the proposed regulations, which must be submitted no later than Monday, August 29, 2022.

Put into practice : These proposed changes appear to be part of the California regulator’s broader effort to combat illegal and deceptive acts and practices in debt collection. According to a consumer alert published on July 21, the DFPI has recently seen an increase in complaints involving bogus debt collectors attempting to collect fake debts. The DFPI also recently issued three enforcement actions against several debt collectors for illegal and deceptive debt collection activities (see complaints here, here and here). Given the recent regulatory focus on debt collection, companies engaged in debt collection must ensure that their business practices comply with California law.


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