California Legislature Passes Bills Requiring Debt Collectors to Obtain Licenses
The California legislature has now passed a third piece of legislation related to the consumer financial services industry, SB 908, which establishes new licensure requirements for debt collectors. California Governor Gavin Newsom has until September 30 to sign or veto the bill.
If passed, any person “engaged in the business of collecting, on behalf of themselves or others, debts arising from consumer credit transactions with consumers in California” would be required to obtain a license, according to Ballard Spahr’s Consumer Finance Monitor.
To be issued a license, applicants must sign the application under penalty of perjury, undergo a criminal background check, and pay an application fee. Debt buyers must also include their license number in written statements when collecting consumer debts.
The bill also forms the Debt Collection Advisory Committee, made up of seven members and charged with helping the commissioner of the Department of Business Oversight (DBO) on issues pertaining to debt collection. The DBO can enforce the bill through suspension of licenses, investigations, and issuing claims and orders for relief.
Additionally, the bill exempts depository institutions; debt collections managed by the Student Loan Servicing Act; those licensed under California’s Financing Law, Residential Mortgage Lending Act, or Real Estate Law; and those subject to the Rental-Purchase Act.
If signed by Governor Newsom, debt collectors must be licensed by January 1, 2022 to engage in any debt collection in California.
Another bill recently passed is AB-1864, which forms the Department of Financial Protection and Innovation and the California Financial Protection Law. It would “prescribe rules applicable to any covered person or service provider identifying as unlawful, unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service,” according to Consumer Finance Monitor. A third piece of legislation, AB-376, establishes a new Student Loan Borrower Bill of Rights.