Schools Should Review New Collection Licensing Law Requirements
12/13/2021
Under a new California law, the Debt Collection Licensing Act (DCLA), which takes effect January 1, 2022, no person or organization shall engage in the business of debt collection in the state without first obtaining a license. Colleges and universities should note this includes entities not located within California seeking to collect from California residents, as well as organizations located within California collecting from residents and nonresidents.
NACUBO and several other organizations have received conflicting information from legitimate sources on the applicability of the DCLA as it relates to colleges and universities. Given upcoming deadlines and the absence of a clear carve out for higher education institutions, NACUBO recommends that colleges and universities—along with counsel—carefully review the DCLA and accompanying information to determine if their activities rise to the level of debt collector, as defined.
If, as the result of that risk-based determination, institutions choose to apply for a license from California, they will need to submit their application, along with all supporting information, no later than December 31.
Independent of whether colleges and universities will be required to comply with the law, schools that utilize debt collection agencies will want to ensure that those companies are in compliance with DCLA.
NACUBO staff will provide updates should additional information become available.
