SB1131 - Debt collection.

Amended IN Senate April 08, 2026 Amended IN Senate March 23, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1131 Introduced by Senator Jones February 17, 2026 An act to amend Sections 100000, 100000.7, 100001, 100002, 100003, 100004, 100005, 100007, 100018, 100020, 100021, 100023, 100023 and 100025 of the Financial Code, relating to debt collection. LEGISLATIVE COUNSEL'S DIGEST SB 1131, as amended, Jones. Debt collection. The Debt Collection Licensing Act generally regulates the business of debt collection and prohibits a person from engaging in the business of debt collection in this state without first obtaining a license pursuant to the act. The act requires a license to be obtained for a licensee’s principal place of business and does not require separate licenses for each individual branch office. The act exempts specified persons and activities from its provisions. The act prescribes the duties and powers of the Commissioner of Financial Protection and Innovation, which includes revoking or suspending any license for a violation of the Fair Debt Collection Practices Act or specified fair debt buying practices provisions. The act requires an applicant to, among other things, pay an application fee of $350 and an annual fee based on a prescribed formula, as specified. The act also requires a licensee to file an annual report with prescribed information, including the total or face dollar amount of various kinds of accounts. The act also requires the commissioner to conduct include conducting prescribed examinations as often as the commissioner deems necessary and appropriate, and authorizes authorizing the commissioner to conduct those examinations electronically, as specified. The act also establishes the Debt Collection Advisory Committee to advise the commissioner on matters relating to debt collection or the debt collection business, as specified. This bill would rename the act to the Debt Collector Licensing Act. The bill would instead require a single license for a licensee’s business and not require separate licenses for each individual branch office, facility, affiliate, or subsidiary of the licensee. This bill would exempt additional persons and activities from the act’s provisions. The bill would also limit the commissioner’s power to suspend a license for a violation of the Fair Debt Collection Practices Act or specified fair debt buying practices provisions if the violation has been adjudicated by a court. The bill would also increase the application fee to $1,000 and change the annual fee to $1,000, $4,000, or $7,000 based on the number of California debtor accounts in active collection, as specified. The bill would remove the requirement to report information regarding total or face dollar amounts of various kinds of accounts referenced above. The bill would require the commissioner to conduct examinations remotely unless an onsite examination is considered necessary for the protection of the public, as specified. The bill would also rename the Debt Collection Advisory Committee as the Debt Collection Advisory Board, require the commissioner to request the advice of the board before the initial publication or adoption of fee schedules or a proposed regulation, except as specified, and exempt the board from the Bagley-Keene Open Meeting Act. The bill would also make other technical and conforming changes. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 100000 of the Financial Code is amended to read: 100000. This division shall be known, and may be cited, as the Debt Collector Licensing Act. SEC. 2. Section 100000.7 of the Financial Code is amended to read: 100000.7. A county, city, or other political subdivision within this state shall not require a debt collector to be licensed or to register as a debt collector. SEC. 3. Section 100001 of the Financial Code is amended to read: 100001. (a) (1) A person shall not operate as a debt collector in this state without first obtaining a license pursuant to this division. (2) For purposes of paragraph (1), to the extent permitted by federal law, a person is acting in this state if the person is located in this state and is seeking to collect from a debtor that resides inside or outside the state, or is located outside of the state and is seeking to collect from a debtor that resides in this state. (3) A single license shall be obtained for the licensee’s business and shall not be transferred or assigned. (4) A separate license is not required for each individual branch office, facility, affiliate, or subsidiary of the licensee. (b) (1) Except as provided in paragraph (2), this division shall not apply to any of the following: (A) A depository institution, as defined in Section 1420, or any regulated affiliate or subsidiary of that institution. (B) A person licensed pursuant to Division 9 (commencing with Section 22000). (C) A person licensed pursuant to Division 20 (commencing with Section 50000). (D) A person licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code. (E) A person who is subject to the Karnette Rental-Purchase Act (Title 2.96 (commencing with Section 1812.620) of Part 4 of Division 3 of the Civil Code). (F) A trustee performing acts in connection with a nonjudicial foreclosure pursuant to Article 1 (commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code. (G) A person described in Section 1692a(6)(F) of Title 15 of the United States Code. (H) A person or entity licensed pursuant to or subject to the State Bar Act (Chapter 4 (commencing with Section 6000) of Division 3 of the Business and Professions Code). (2) The commissioner may use the authority described in Section 100005 in connection with a court-adjudicated violation of Title 1.6C (commencing with Section 1788) or Title 1.6C.5 (commencing with Section 1788.50) of Part 4 of Division 3 of the Civil Code by a person described in paragraph (1). (c) This division shall not apply to any of the following: (1) Debt collection regulated pursuant to Division 12.5 (commencing with Section 28100). (2) The collection of covered commercial debt or covered commercial credit, as those terms are defined in Section 1788.2 of the Civil Code. (3) Debt collection regulated pursuant to Section 6077.5 of the Business and Profession Code. SEC. 4. Section 100002 of the Financial Code is amended to read: 100002. For purposes of this division, the following terms have the following meanings: (a) “Applicant” means a person, including a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other entity, who applied for a license pursuant to this division. (b) “California debtor accounts” means accounts that are owned by consumers who reside in California at the time that the consumer makes a payment on the account. (c) “Commissioner” means the Commissioner of Financial Protection and Innovation. (d) “Consumer credit transaction” means a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes. (e) “Consumer debt” or “consumer credit” means money, property, or their equivalent, due or owing, or alleged to be due or owing, from a natural person by reason of a consumer credit transaction. The term “consumer debt” includes a mortgage debt. The term “consumer debt” includes “charged-off consumer debt” as defined in Section 1788.50 of the Civil Code. (f) “Creditor” means a person who extends consumer credit to a debtor. (g) “Debt” means money, property, or their equivalent that is due or owning or alleged to be due or owing from a natural person to another person. (h) “Debt collection” means any act or practice in connection with the collection of consumer debt. (i) “Debt collector” means any person who, in the ordinary course of business, regularly, on the person’s own behalf or on behalf of others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters and other collection media used or intended to be used for debt collection. The term “debt collector” includes “debt buyer” as defined in Section 1788.50 of the Civil Code. (j) “Debtor” means a natural person from whom a debt collector seeks to collect a consumer debt that is due or owing or alleged to be due or owing from the person. (k) “Department” means the Department of Financial Protection and Innovation. (l) “Fund” means the Debt Collection Licensing Fund established pursuant to Section 100006.5. (m) “Licensee” means a person licensed, conditionally or unconditionally, pursuant to this chapter. (n) “Nationwide Multistate Licensing System & Registry” means a system of record, created by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, for nondepository, financial services licensing or registration in participating state agencies, the District of Columbia, Puerto Rico, the United States Virgin Islands, and Guam. (o) “Person” means a natural person, partnership, corporation, limited liability company, trust, estate, cooperative, association, or other similar entity. SEC. 5. Section 100003 of the Financial Code is amended to read: 100003. (a) The commissioner shall administer this division and may adopt rules and regulations, and issue orders, consistent with that authority. (b) Without limitation, the functions, powers, and duties of the commissioner include all of the following: (1) To issue or to refuse to issue a license as provided in this division. (2) To allow affiliated companies to be under a single license. The commissioner shall adopt regulations specifying what constitutes an affiliated company for these purposes. (3) To revoke or suspend any license for a violation of this division or a court-adjudicated violation of Title 1.6C (commencing with Section 1788) or Title 1.6C.5 (commencing with Section 1788.50) of Part 4 of Division 3 of the Civil Code. (4) To keep records of licenses issued under this division. (5) To receive, consider, investigate, and act upon a complaint made in connection with a licensee. (6) To prescribe the form of and to receive applications for licenses and reports, books, and records required to be made or retained by a licensee. (7) To subpoena documents and witnesses, and to compel their attendance and production, to administer oaths, and to require the production of books, papers, or other materials relevant to any inquiry authorized by this division. (8) To require information with regard to an applicant that the commissioner may deem necessary, with regard for the paramount public interest in ascertaining the experience, background, honesty, truthfulness, integrity, and competency of an applicant for collecting consumer debt, and if an applicant is an entity other than an individual, in ascertaining the honesty, truthfulness, integrity, and competency of officers, directors, or managing members of the corporation, association, or other entity, or the general patters of a partnership. (9) To enforce by order any provision of this division. (10) To levy fees, fines, and charges in an amount sufficient to cover the cost of the services performed in administering this division. The fees collected pursuant to this division shall not exceed the costs of administering this division. SEC. 6. Section 100004 of the Financial Code is amended to read: 100004. (a) Notwithstanding any law the commissioner shall have the authority to conduct investigations and examinations of an applicant or licensee as follows: (1) For purposes of determining whether an applicant is eligible for a license, or that a licensee is complying with the provisions of this division or any regulation or order of the commissioner, the commissioner may access, receive, and use any books, accounts, records, files, documents, information, or evidence that relates to debt collection, including, but not limited to, any of the following relating to the intent to, or the practice of, collecting consumer debt: (A) Criminal, civil, and administrative history information. (B) Personal history and experience information, including, but not limited to, independent credit reports obtained from a consumer reporting agency. (C) Any other documents, information, or evidence that the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of those documents, information, or evidence. (2) For the purposes of investigating violations or complaints arising under this division, the commissioner may direct, subpoena, or order the attendance of, and examine under oath, any person whose testimony may be required about the consumer debt or account of the debtor. (b) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, a person shall not remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of a licensee have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this division, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct their ordinary business affairs. (c) The commissioner may permit affiliated companies to be subject to a single examination. The department shall list all affiliated company names on the license and shall post them on the department’s internet website. SEC. 7. Section 100005 of the Financial Code is amended to read: 100005. (a) If, in the opinion of the commissioner, a person who is required to be licensed under this division is operating as a debt collector without a license from the commissioner, or a person or licensee has violated any provision of this division, an order, or a regulation adopted pursuant to this division, or Title 1.6C (commencing with Section 1 [Text truncated for display. Full text available on Congress.gov.]