Debtors Get Another “Win” as California Soon to Require Licensing for Debt Collectors

Debtors Get Another "Win" as California Soon to Require Licensing for Debt Collectors

Last year, the California General Assembly gave a “win” to California debtors by passing a law requiring debt collectors to be licensed. The law is called the Debt Collection Licensing Act (“DCLA”) The licensing requirement will take effect on January 1st of next year. The DCLA is really “good” for debtors for many reasons including:

  • California regulators will now have a complete list of debt collectors so that enforcement of California’s fair debt collection laws will be easier
  • Likely, some of the most abusive debt collection companies will not be able to obtain a license and, thus, will not be able to operate in California
  • All debt collection companies — from all over the country — will have to comply with the DCLA
  • Attempting to collect debts without a license can be severely punished
  • Debt collectors will have to meet certain standards
  • Likely, debt collectors will engage in better training for their employees reducing abusive and harassing debt collection practices

Importantly, the DCLA defines “debt collector” very broadly. Specifically, the DCLA defines a “debt collector” as any person or business “… who, in the ordinary course of business, regularly, on the person’s own behalf or on behalf of others, engages in debt collection.” So standard debt collection companies are included, but also any agents and third party vendors of the debt collection company. This covers attorneys and companies that prepare debt collection letters and those engaging in other types of debt collection efforts like making phone calls, texting and/or messaging debtors.

The DCLA will be administered and enforced by one of California’s consumer protection agencies. If a debtor collector fails to obtain a license or operates without a license, the following punishments can be ordered:

  • Banning the debt collector from operating in California — permanently or temporarily
  • Ordering the payment of refunds, restitution and damages to victims
  • Ordering the company to pay civil fines to the State of California
  • Ordering the disgorgement of profits

California has a number of laws that prohibit debt collectors from engaging in unlawful, unfair, deceptive and/or abusive acts or practices with respect to collecting consumer debts. If a company is found to have violated any of these debtor protection statutes, such violations can be grounds for regulators to suspend or revoke a license granted under the DCLA. State regulators can also suspend or revoke a license for other reasons including:

  • If a debt collector does not cooperate with an examination or investigation
  • If a debt collector is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors
  • If a debt collector fails to comply with the DCLA by failing to keep records, allowing for examination of its records and/or fails to provide reports to State regulators

Contact an Experienced Debt Relief and Debtor’s Rights Attorney

For more information, contact the debtor’s rights attorneys at Guardian Litigation Group. If you think you have been subject to unfair and deceptive debt collection practices, we can help. We can also help with other debt-relief legal services like bankruptcies and debt settlement negotiations. We have the tools and experience you need. Our mission is to provide unparalleled legal services and support to financially distressed individuals. We can be reached via our contact page or by phone at (949) 444-5474.