In a development that was first reported by ACA International, the California Department of Financial Protection and Innovation is proposing an amendment that would define the “net proceeds” use to determine how much licensees pay the department annually.
The DFPI is also proposing changes to the annual reports that licensees have to file with the department detailing their collection activities for the prior year.
The proposal will define “net proceeds” as “the amount retained by a debt collector from its California debt collection activity.”
Net proceeds are “equal to the amount a collector receives from its clients, regardless of fee structure, before deducting costs and expenses. For purposes of this section, ‘client’ means the company on whose behalf the debt collector has been contracted to collect on an account.”
The proposal removed a section that would have defined net proceeds for first-party collectors differently.
The final proposal also introduced changes to the annual reports that collectors must file with the DFPI. Among the data points that will need to be provided are:
- The total number of California debtor accounts for which collection was attempted that were resolved for less than the full amount of the debt. The original proposal was to provide the total number of accounts for which collection was collected on.
- The total number of California debtor accounts for which collection was attempted where payments were made but a balance remains due. The original proposal would have required submitting information on accounts that were collected on, including accounts where less than the full amount of the debt was collected.
- The report must also include the total number of California debtor accounts for which collection was attempted, but no payments were collected during the preceding calendar year.
