California Adopts New Debt Collection Regulations

New regulations from the California Department of Financial Protection and Innovation (Department) affecting licensure of debt collectors became effective as of January 1, 2022.  The regulations provide the process and requirements to apply for a license as a debt collector, including application through the NMLS, and specify the acts that constitute grounds for license denial.

The California Debt Collection Licensing Act (the Act) prohibits any person from engaging in the business of consumer debt collection without a license from the Department and authorizes the Department to adopt rules to administer the Act.  Among other provisions, the recently effective rules require applicants to apply through the NMLS and includes rules for affiliates applying under a single license; establishes the process for challenging information entered into the NMLS; identifies factors the Department may consider in denying a license; establishes the process for submitting and maintaining the required surety bond; and sets forth the process for surrendering a license.