​On September 22, 2021, the California Department of Financial Protection and Innovation (DFPI) announced that it issued its first enforcement action against a debt collection company for various practices, including threatening to sue consumers and garnish wages, and for submitting negative information to credit bureaus without first providing required notice, in violation of the California Consumer Financial Protection Law (CCFPL).

Specifically, the DFPI found that from May through August 2021, the company violated the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) by leaving consumers automated voicemails that failed to identify the company and made false representations about initiating legal proceedings​ and wage garnishments.  DFPI also found that the company engaged in “debt parking” by furnishing negative credit information to credit bureaus without first attempting to communicate with consumers about the alleged debt or notify consumers in writing within 30 days of furnishing that negative credit information in violation of the Consumer Credit Reporting Agencies Act (CCRAA).  Additionally, DFPI found that the company violated the Fair Debt Collection Practices Act (FDCPA) by failing to provide certain disclosures within five days of its initial communication regarding the alleged debt, including the amount of debt, name of creditor, and notice that the consumer has 30 days to dispute the validity of the debt.

Under the CCFPL, a company that engages in offering or providing a consumer financial product or service to a resident of California may not engage in unlawful, unfair, deceptive, or abusive acts or practices or commit any act in violation of a consumer financial law. The DFPI found that the company violated the CCFPL by engaging in the acts described above and issued a desist and refrain order against the company.  The DFPI also ordered the company to pay an administrative penalty of $375,000.

In its press release, the DFPI also noted that as of September 1, all debt collectors are now able to apply to be licensed by the Department by submitting an online application with the Nationwide Multistate Licensing System (NMLS).  Under the recently enacted Debt Collection Licensing Act (DCLA), all debt collectors must submit a license application prior to January 1, 2022 in order to continue operating in California next year.