Attention debt collectors in California: New law requires action by December 31, 2021 – Finance and Banking


United States: Attention debt collectors in California: New law requires action by December 31, 2021

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As of January 1, 2022, under California’s new Debt Collection Licensing Act (DCLA), all consumer debt collectors who collect on their own or on behalf of others, including debt buyers , must be licensed by the California Department of Financial Protection and Innovation (DFPI). To comply with this new law, debt collectors must apply for a DFPI license no later than December 31, 2021. The following link will provide additional information on this new requirement: https://dfpi.ca.gov/debt-collection-licensee/. If you do not apply for at least one license by December 31, 2021, you will be prohibited from continuing to operate in California until a license is issued, which can take up to a year or more. DFPI will review applications and start issuing licenses in 2022 and 2023.

A “debt collector” who must comply with this new licensing requirement is “any person who, in the ordinary course of business, regularly, for his own account or for the account of others, engages in [consumer] Debt recovery. The term includes anyone 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. The term “debt collector” includes “debt buyer”. In addition, affiliates that engage in debt collection activities are required to apply for a license.

The new licensing law only applies to consumer debts which are debts incurred by natural persons in exchange for money, property or their equivalent, due or owed, or allegedly due or due due to a consumer credit transaction for personal, family or household purposes. Typical examples of consumer debt are HOA dues or assessments, credit card debt, student loans, auto loans, payday loans, residential rental or leasing debt, and rental debt. other household debts. There are certain exemptions to this new licensing requirement, including debt collectors licensed under the California Real Estate Act, Residential Mortgage Act, foreclosure trustees, student loan officers, and individuals. subject to the Karnette Rental-Purchase law.

There are additional requirements that consumer debt collectors must comply with in accordance with this new law set out in section 100000 et seq. of the California Financial Code. and changes to sections 1178.11 and 1788.52 of the California Civil Code. For example, as of January 1, 2022, debt collection licensees must provide their new license number in telephone calls if the consumer requests it and display the license number in all digital and written communications. , using at least 12 point font.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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