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Financial Services Law Insights and Observations

DFPI issues NPRM on debt collector licensing requirements

Licensing State Legislation State Regulators DFPI Debt Collection NMLS

On June 23, the California Department of Financial Protection and Innovation (DFPI) issued a notice of proposed rulemaking (NPRM) to incorporate changes to its debt collection license requirements and application. As previously covered by InfoBytes, in 2020, California enacted the “Debt Collection Licensing Act” (the Act), which requires a person engaging in the business of debt collecting in the state, as defined by the Act, to be licensed and provides for the regulation and oversight of debt collectors by DFPI. In April, DFPI issued a NPRM to adopt new requirements for debt collectors seeking to obtain a license to operate in the state (covered by InfoBytes here). 

Among other things, the most recent NPRM seeks to:

  • Revise the definition of “applicant” to clarify that an affiliate who is not applying for a license is not an applicant.
  • Include language requirements for documents filed with DFPI.
  • Clarify the requirements and appointment process of DFPI as the agent for service of process.
  • Eliminate the requirement that an applicant must file a copy of the California Department of Justice Request for Live Scan Service form for each individual with the Nationwide Multistate Licensing System & Registry (NMLS) instead of DFPI.
  • Remove requirements regarding the submission of the management chart being submitted to DFPI, the extent to which an applicant intends to utilize third parties to perform debt collection functions, and the filing with NMLS of policies and procedures.
  • Refine requirements for maintaining media records.
  • Refine the process of filing a change in control amendment for new officers, directors, partners, and other control people.
  • Establish new branch office registration procedures.
  • Eliminate requiring the submission of the total dollar amount of debt collected from consumers to determine whether a higher surety bond is required.
  • Remove provisions that would permit DFPI to set a higher surety bond amount.

DFPI’s notice specifies that comments on the most recent proposed modifications are due July 12.