The American Financial Services Association (AFSA) has formally communicated with California's Department of Financial Protection and Innovation (DFPI), advocating for clearer regulations under the Debt Collection Licensing Act. The association aims to ensure that indirect auto finance companies are aligned with federal standards.
California’s Debt Collection Licensing Act mandates that many debt collectors and debt buyers in the state obtain a license from DFPI and adhere to its regulations. According to DFPI, these regulations include requirements for license applications, annual reporting, and assessment, with all relevant information publicly accessible.
In a joint comment letter to DFPI, AFSA and the Consumer Financial Services Association (CFSA) expressed concerns that the draft rules inadequately address indirect auto financing in California. They argued that companies involved in accounts not in default should be classified as "1st Party Creditors" under an exemption consistent with the federal Fair Debt Collection Practices Act (FDCPA). Furthermore, they suggested using charged-off debt instead of accounts 90 days past due as a compliance trigger.
According to AFSA and CFSA, DFPI’s current interpretation and proposed rules have led to "significant confusion" among regulated firms, particularly regarding how indirect auto finance companies should calculate "net proceeds" for annual reports. The letter emphasized that this uncertainty has necessitated "significant curative labor" from both DFPI and the industry within a short timeframe, raising concerns about operational burdens and unclear compliance expectations.
AFSA is a national trade association representing providers and servicers of consumer credit, including auto finance, mortgages, and other installment lending. The organization advocates on federal and state policies affecting consumer financial services, focusing on protecting consumer choice and access to responsible credit. AFSA engages policymakers through comment letters, regulatory engagement, and direct advocacy on proposed rules impacting its members.
