California’s Department of Financial Protection and Innovation has issued a Notice of Proposed Rulemaking in relation to its plan to adopt licensing requirements for debt collectors, and opened a 45-day comment period on those proposed rules. The proposed rules seek to adopt the application that will have to be used by collectors when applying for a license to collect from individuals living in the state.
The licensing law is scheduled to go into effect on Jan. 1, 2022. The proposed rules, if adopted, are expected to go into effect on November 19 of this year. Instructions for submitting comments on the proposed rules can be found by clicking here.
Under the proposal, collectors would be able to apply for a license via the Nationwide Multistate Licensing System (NMLS). The application will have to include the applicant’s principal place of business, as well as all branch locations. Applicants will also have to carry a surety bond of $25,000.
The proposed rules seek to add several sections to existing regulations, including new sections for definitions of key terms, such as debt buyer and debt collector, as well as the licensing and application requirements, the process for challenging information already in the NMLS, and the grounds for which a license application may be denied.
The full text of the proposed rules may be accessed by clicking here. Applicants will have to include background checks, fingerprints, and submit to a credit report check, among the many other requirements.
Additional rulemakings from the DFPI are expected in 2022 to address the requirements for maintaining books and records and establish the amount of the surety bond required based on the volume of debt collection activity.
