Late yesterday, the Receivables Management Association International (RMAI), ACA International, and Progressive Management Systems filed a class action lawsuit against the California Department of Financial Protection & Innovation (DFPI) to challenge the fee structure of the California Debt Collection Licensing Act.

The suit argues the fees are an unlawful tax imposed in violation of Proposition 26 (Cal. Const., art. XIII A, § 3) for the following reasons:

  • The total to be recovered exceeds the reasonable cost of regulation. DFPI has developed program costs for 7,000 licensees but currently licenses 1,243 businesses. Rather than recalibrate its fees once it learned of the actual costs of the licensing tasks for the smaller group of licensees, it set unreasonable and disproportionate fees based on inaccurate information.
  • The allocation of fees based on the gross receipts (or proxies for gross receipts) of regulated businesses is grossly disproportionate to larger businesses’ burdens on or benefits from the regulatory program. DFPI’s ratemaking record reflects no evidence that it allocates examination frequency, investigative intensity, or enforcement resources based on licensee net proceeds.
  • Audit costs are at DFPI’s absolute discretion and are unreasonably high when compared to what other States charge. Given what can be imposed on a licensed business in terms of frequency, length, and intensity of audits makes the costs unpredictable.

In 2020, the California legislature adopted the first debt collection licensing law in the 21st century and became the 35th state to license debt collectors. The law contained unique provisions, including a pro rata annual fee structure based on gross receipts. On September 30, 2025, DFPI issued its first annual assessments, which ranged from $250 to $1,421,404. Forty percent of licensees were assessed thousands more than in any other state.

RMAI and ACA are committed to fighting for the rights of the receivables industry and the vital role it continues to play in the United States credit-based economy. We will keep you apprised as the litigation unfolds.

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.