On July 15, the California Department of Financial Protection and Innovation (DFPI) issued an invitation for comments on proposed additions to regulations implementing the Debt Collection Licensing Act (DCLA). According to the invitation, the new provisions pertain “to the scope, annual report, and document retention requirements of the DCLA.” For example, the proposed regulations define “original creditors” and propose to generally exclude them from licensure unless one or more of the following benchmarks applies:

The proposed regulations also exclude from licensure “person[s] solely servicing debts not in default on behalf of an original creditor[.]”

Additionally, the proposed regulations would:

  • Add some definitional provisions, including one which defines what it means to “[e]ngage in the business of debt collection”;
  • Exclude parent entities, subsidiaries, and affiliates from the statutory licensing exemption;
  • Exclude various government bodies, health care-related entities, public utilities, and some entities operating under the Student Loan Servicing Act from licensure under the DCLA;
  • Exclude from the definition of “consumer credit transactions” certain debts related to resident rent, HOAs, and health care;
  • Require a signed attestation from a principal officer or sole proprietor of a licensee to the accuracy and completeness of the annual report;
  • Clarify what information an annual report must contain regarding certain debtor accounts;
  • Require, with some exclusions, records pertaining to contact or attempted contact with anyone associated with a debtor account, along with records pertaining to:
    • Employees;
    • Records required by other laws;
    • Accrued fees, interest, and charges;
    • Termination of collection efforts on an account; and
    • Complaints, responses, and supporting compliance documentation; and
  • Require the above records be kept for seven years and outline how to calculate the retention period.

To review the full text of the proposed regulation, click here.

Comments, which may be submitted either by email or mail, must be submitted by Monday, August 29. For information regarding how and where to submit comments, review the DFPI’s invitation to comment by clicking here.