California notifies debt collectors of processing delays

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On May 23, the California Department of Financial Protection and Innovation (DFPI or Department) sent an email advising license applicants and potential license applicants that licensing under the Debt Collection Licensing Act is inevitably delayed for the time being.

The original deadline for applicants was December 31, 2021; however, this deadline has been extended to March 15 in mid-December. Two months later, the Ministry still finds itself unable to process new requests.

The Federal Bureau of Investigation (FBI) has advised the DFPI that further changes are needed to state agency protocols — particularly fingerprinting — for requesting federal background checks. According to the Department, the delay was unforeseen, but it is necessary to allow the DFPI to fully implement the licensing background check required under the Debt Collections Licensing Act.

The delay does not necessarily affect debt collectors doing business in the state. According to the DFPI, applicants may continue to do business and the Department will take no action for unauthorized activity against applicants who filed their applications after December 31, 2021. For purposes of including debt collection license numbers of California when contacting or communicating with required under Civil Code Section 1788.11, an applicant who filed through the NMLS may indicate “pending license number” or verbiage similar until a license is issued.

The DFPI previously said that people who file before March 15 would be deemed temporarily compliant with California’s license requirement, pending approval of the license application. This delay was not impacted by this new statement. In other words, while the DFPI does not yet issue licenses, it takes the position that only collectors who have applied for a license are permitted to collect in California.

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