Consumer notification requirements for debt collectors were part of consumer financial protection legislation signed by Governor Gavin Newsom in California on Monday, according to a press release from the governor’s office.
The legislation expands the scope of the Fair Debt Buying Practices Act of 2013 to focus on third-party debt collection agencies, says Andrew Madden, vice president of state and government affairs at ACA International.
SB 531, sponsored by State Senator Bob Wieckowski, D-Fremont, would require third party collectors of assigned receivables to provide, upon request and within 30 days, a statement that includes account balance information and the reason for interest. and fees, Madden said. The agency will also have to provide the date of the last payment made by the consumer and when the debt became unpaid.
It would also prohibit a debt collector from making a written statement to a consumer in an attempt to collect an overdue consumer debt, unless the third party agency has access to a contract or other evidence showing that a debt is owed, Madden said.
There are exemptions in this legislation, however, if the agency does not have a signed contract or if it is revolving debt.
“SB 531 was a priority for the California Collectors Association as they advocated for amendments to address industry concerns,” Madden said.
Newsom also signed AB 1405 on Monday, sponsored by State Assembly Member Buffy Wicks, D-Oakland. The law “protects Californians from predatory debt settlement practices by ensuring that providers disclose important information to consumers about the process,” according to the governor’s press release. “Under the legislation, clients who sign up for a debt settlement plan will have a three-day window to review disclosures before the contract takes effect.”
Private student loan collection reform
The California legislature also enacted the Private Student Loan Collection Reform Act, AB 424, sponsored by State Assembly Member Mark Stone, D-Monterey Bay; however, governor’s approval is pending.
The legislation places new documentation requirements on private student loan lenders before initiating any collection activity, Madden said. It also requires that student loan settlements by private lenders and debt collectors be made in open court.
California license and draft regulations
Meanwhile, the California Department of Financial Protection and Innovation (DFPI) comment period on the recently enacted California Consumer Financial Protection Act (CCFPL) and Debt Collection Licensing Act (DCLA) has expired. October 5.
On April 8, 2021, the DFPI Commissioner launched a regulation to adopt regulations related to licensing requirements under the DCLA. The Commissioner is now considering a second regulation to adopt regulations related to other provisions of the DCLA, including its scope, annual reports and bond amounts.
The Commissioner invites interested parties to contribute to the development of regulations related to these topics and has formulated questions to help these parties provide this input. The Commissioner also invites interested parties to provide examples of language for regulations related to these subjects.
Agencies should also be made aware of new California licensing requirements under the DCLA, requiring California debt collectors and buyers to apply for a DFPI license by December 31, 2021.
The license application is now available on the Nationwide Multistate Licensing System website, the ACA previously reported.
The DCLA, which comes into effect on January 1, 2022, requires anyone engaged in debt collection activity in California to be licensed by the DFPI.
The ACA licensing team has resources to help members navigate the licensing process.
“We have known this has been happening for some time and can walk members through the steps to apply for their license and make sure they know the DFPI requirements,” said Angela Butera, Licensing Officer.
For more information on how ACA licensing staff can help you complete your license applications, please contact us at firstname.lastname@example.org or call (952) 926-6547.