California DFPI Issues $ 375,000 Penalty Against Debt Collector | Goodwin
On September 22, 2021, the California Department of Financial Protection and Innovation (DFPI) announcement that he published his first coercive action against a debt collection company for various practices, including threatening to sue consumers and garnishing wages, and for submitting negative information to credit bureaus without first providing the required notice, in violation of California law on Financial Consumer Protection (CCFPL).
Specifically, the DFPI found that from May to August 2021, the company violated the Rosenthal Law on Fair Debt Collection Practices (Rosenthal Law) by leaving consumers with automated voicemail messages that did not identify the company. and made false statements regarding the initiation of legal proceedings and wage garnishments. DFPI also found that the company had engaged in “debt parking” by providing negative credit information to credit bureaus without first attempting to communicate with consumers about the suspected debt or d ” Notify consumers in writing within 30 days of providing such negative credit information in violation of the Consumer Credit Reporting Agencies Act (LCRAA). Further, DFPI found that the company violated the Fair Debt Collection Practices Act (FDCPA) by failing to provide certain information within five days of its initial communication regarding the alleged debt, including the amount of debt, name of the creditor and the notice that the consumer has 30 days to contest the validity of the claim.
Under the CCFPL, a business that is committed to offering or providing a consumer financial product or service to a California resident may not engage in any unlawful, unfair, deceptive or abusive acts or practices or commit an act in violation of a financial consumer law. The DFPI concluded that the company had violated the CCFPL by engaging in the acts described above and issued a cease and desist order against the company. The DFPI also ordered the company to pay an administrative penalty of $ 375,000.
In its press release, the DFPI also noted that as of September 1, all debt collectors can now apply to be licensed by the Department by submitting a online application with the National Multi-State Licensing System (NMLS). Under the recently enacted Debt Collection Licensing Act (DCLA), all debt collectors must apply for a license by January 1, 2022 in order to continue operating in California next year.