California DFPI Announces Upcoming Debt Collection License Assessments

The DFPI has identified several common reporting errors that licensees should be aware of. Companies needing to amend their reported net proceeds for 2024 can resubmit their annual report by Aug. 29, 2025.

08/06/2025 2:30 P.M.

2.5 minute read

The California Department of Financial Protection and Innovation (DFPI) has announced that it will be conducting its first annual assessment for the Debt Collection Licensing Program for the 2025-2026 fiscal year. Licensees will be invoiced their annual fee by Sept. 30, 2025, with payment due by Jan. 1, 2026.

According to an email the DFPI sent to Collectors Insurance Agency, a subsidiary of ACA International, the annual assessment for each licensee will be calculated based on a pro rata share of the costs and expenses incurred in administering the Debt Collection Licensing Act. The pro rata share is determined using the net proceeds reported in each licensee’s 2024 Annual Report, which was due in March 2025.

DFPI Flags Common Reporting Errors

The DFPI said its review of the 2024 annual reports revealed that many licensees reported net proceeds with calculation errors, including some reporting no net proceeds at all. As inaccurate reporting significantly impacts the annual assessment of all licensees, DFPI strongly urges licensees to review their net proceeds calculations and make necessary adjustments by Aug. 29, 2025.

Some of these common errors include:

1. Using net income instead of gross income as a baseline.
2. Not recognizing all types of debt collection activities.
3. Not reporting the income of affiliates or holding companies for consolidated accounting.
4. Using incorrect methodology to calculate Net Proceeds.

How to Correctly Calculate Net Proceeds

The methodology for calculating net proceeds depends on the licensee’s business model, the DFPI notes:

Debt Buyers: Net proceeds equal the amount collected on a debt minus the prorated amount paid for that debt, before deducting costs and expenses.

Debt Owners (non-Debt Buyers): Net proceeds equal the amount received in fees and other charges from debtors that would not have been obtained had the debt been paid on time, before deducting costs and expenses.

All Other Debt Collectors: Net proceeds equal the amount received from clients, regardless of fee structure, before deducting costs and expenses.

Resubmitting 2024 Annual Reports

The DFPI said that licensees needing to amend their reported net proceeds can resubmit their 2024 annual report through the DFPI’s online portal by Aug. 29, 2025. Inaccurate or false reporting beyond this deadline may result in regulatory examinations and enforcement actions.

Maintaining an accurate Debt Collection Licensing Act license is crucial for debt collectors to continue conducting business in California. ACA International members are encouraged to review their net proceeds calculations and make any necessary corrections.

For more information on how the Collectors Insurance Agency licensing staff can assist with your licensing needs, contact licensing@acainternational.org or call (952) 926-6547.