California’s Debt Collection Licensing Act Moves One Step Closer to Becoming Law

Troutman Pepper

Troutman Pepper

In a 9-3 vote earlier this month, the California Assembly Banking and Finance Committee approved legislation requiring a license for debt collectors and debt buyers, entitled the Debt Collection Licensing Act (SB 908) (DCLA).

The DCLA would prohibit a person from engaging in the business of collecting on a consumer debt in this state without a license and comply with reporting, examination, and other oversight by the California Department of Business Oversight (DBO). If enacted, for the first time since 1992, consumer debt collection agencies and debt buyers in California would be subject to licensing requirements. The DCLA would also require the DBO to respond to consumer complaints and enforce violations.

The DCLA exempts banks and credit unions from the licensure requirement while authorizing DBO to bring enforcement actions against such entities for violating existing fair debt collection laws to which they are already subject. The California Creditors Bar Association continues to oppose the DCLA unless it is amended to exempt attorneys from the licensure requirement in the same manner provided to banks, mortgage banks, and real estate brokers.

The DCLA already passed in the California Senate 29-4. The California Assembly Appropriations Committee, and the full Assembly, will review the bill next. The Assembly Appropriations Committee scheduled discussion of DCLA for Tuesday, Aug. 18, and continued the discussion to Thursday, Aug. 20. California Gov. Gavin Newsom has indicated that he would sign the bill if it reaches his desk.

Troutman Pepper will continue to follow this legislation and provide an update on any amendments to the DCLA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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