The California Department of Financial Protection and Innovation (DFPI) has announced a second round of modifications to proposed regulations under the Debt Collection Licensing Act. These changes, released earlier this week, primarily affect the definition of “net proceeds” and annual reporting requirements for licensed debt collectors.
The DFPI has refined the definition of “net proceeds generated by California debtor accounts” for different types of debt collectors:
- Debt Buyers: Net proceeds are now defined as the amount collected on a debt minus the prorated amount paid for that debt, before deducting costs and expenses.
- Owners of Non-Defaulted Debt: For purchasers of debt that is not in default, net proceeds are calculated similarly to debt buyers.
- Third-Party Collectors: Net proceeds are defined as the amount received from clients, regardless of fee structure, before deducting costs and expenses.
The proposed modifications also include changes to the annual reporting requirements:
- California Debtor Accounts: Licensees must report the total number of California debtor accounts collected on, including those collected in full, resolved for less than the full amount, and those with remaining balances.
- Unsuccessful Collection Attempts: A new requirement to report the total number and dollar amount of California debtor accounts where collection was attempted but no payments were successfully collected.
- Portfolio Information: Licensees must now report the number of California debtor accounts and the number of California debtors in their portfolio as of December 31 of the preceding year.
How to comment: Industry professionals are encouraged to review the proposed changes and submit comments by September 27, 2024. Comments can be submitted:
By Mail: Department of Financial Protection and Innovation, Attn: DeEtte Phelps, Regulations Coordinator, 2101 Arena Blvd., Sacramento, CA 95834
Via Email: Send to [email protected] with a copy to [email protected] (Subject line: PRO 01-23)
