We are writing to provide an update regarding our joint lawsuit (RMAI & ACA International and Progressive Management Systems v. California Department of Financial Protection and Innovation (DFPI)) challenging the excessive and unlawful assessment fees imposed under California’s Debt Collection Licensing Act (DCLA).

While the court recently issued a ruling regarding our fourth claim (for fee refunds) based on a procedural defect, our core lawsuit challenging the legality of the license fees remains fully intact and active. Below is what happened, what it means for your business, and how you can preserve your rights to a refund.

  1. What Happened in Court

On July 24, 2026, the San Francisco Superior Court sustained the DFPI’s demurrer to our Fourth Cause of Action (which requested a refund of license fees paid).

  • The Procedural Issue-The Court dismissed our fourth claim: Our legal team advised and executed a claim presentation strategy in good faith based on existing precedent (Malear v. State of California). In fact, the judge initially indicated an intention to deny the State’s demurrer. However, while our case was pending, a brand-new California appellate decision (Harland v. City of West Hollywood, June 2026) was handed down. At the last minute the judge reconsidered in light of Harland and strictly interpreted the 45-day waiting period under the Government Claims Act, ruling our refund claim premature.
  • What Was NOT Decided: The court did not rule on the merits of our claims for writ of mandate or declaratory relief challenging the licensing fees. This was only a preliminary, procedural motion on the form of the Complaint. We will present later in the case our evidence to support our claims on the illegality of the fees. The decision rested purely on a technical filing window.
  1. The Big Picture: Core Suit & Legislative Fights Continue

This procedural matter hiccup affects only the refund cause of action in our current filing. The main engine of our lawsuit is moving full steam ahead:

  • Unconstitutionality & Injunction Claims: Our core claims—demanding that the court declare the DCLA fee structure an illegal, unconstitutional tax under Proposition 26 and enjoin the DFPI from collecting these excessive fees—remain alive and moving toward resolution.
  • Legislative Solutions: In addition to our courtroom battle, RMAI and ACA are actively pursuing legislative fixes in Sacramento to reform the DCLA fee framework, eliminate open-ended assessments, and restore fairness for licensees.
  1. How CA Licensee’s Can Preserve Rights to a Fee Refund

There are three primary pathways:

  • Pathway A: Possible Credit / Adjustment (Association Victory): If we prevail on our core claims and the court declares the licensing fee illegal, there is a possibility that the court as part of the remedy may order credits against future licensing fees for the DFPI licensees—even if an individual refund claim was not filed.
  • Pathway B: Associations’ New Plaintiff & Class Strategy: We met with our litigation counsel yesterday to finalize our next moves. We are actively exploring filing a new lawsuit with a new representative plaintiff who satisfies the 45-day Government Claims Act window. The new lawsuit would be limited to a class claim for refunds, which we would expect to consolidate with our main lawsuit.
  • Pathway C: Individual Government Claims Act Filing: You may wish to independently pursue an individual fee claim and should consult with an attorney of your own choice to guide the claim process. Note on Timeline: Counsel advises that refund claims remain subject to a one-year statute of limitations from the date the fee was paid. Members considering this route should consult their legal counsel promptly.

What’s Next?

We are evaluating all legal avenues, including appeal strategies regarding the refund ruling. We will provide updates as they become available.

This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.