Debt Collection ($25,000) - NMLS Bond - Statewide in California

Brief Summary

Two things about this bond are usually reported wrong. It is a minimum, not a set amount, because the commissioner can require more based on how many affiliates sit under your license and how much consumer debt you collect. And it is payable to the commissioner for the recovery of expenses, fines and fees the commissioner levies, which is a different instrument from a consumer restitution bond. The good news for multi office collectors is that a separate license is not required for each branch, so the bond does not multiply by location.

Financial Code section 100019 requires a debt collection licensee to maintain a surety bond in a minimum amount of $25,000, payable to the commissioner and issued by an insurer authorized to do business in California. The bond is used for the recovery of expenses, fines and fees levied by the commissioner under the Debt Collection Licensing Act, and the commissioner may require a higher amount based on the number of affiliates under the license and the dollar amount of consumer debt the licensee collects. The commissioner may require licensees to submit bonds, riders and endorsements electronically through the electronic surety bond function of the Nationwide Multistate Licensing System and Registry.

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How to Apply for a Debt Collection ($25,000) - NMLS Bond:

• Confirm you are inside the Act. Section 100001(b) and (c) exempt depository institutions, licensees under Financial Code Divisions 9 and 20, licensees under Business and Professions Code Division 4 Part 1, rental-purchase entities and nonjudicial foreclosure trustees, and exclude debt collection regulated under Division 12.5 and covered commercial debt or credit under Title 1.6C.
• Confirm the amount with DFPI if you have affiliates under the license or significant collection volume, since the commissioner may require more than $25,000.
• Legal entity name exactly as it appears on the NMLS filing and the license.
• Company financial statements, collection volume and affiliate structure for the surety's underwriting file.
• Owner, officer and control person information, with consent to a credit review.
• Complete the bond application and review the quoted premium.
• Pay the premium and have the surety issue the bond payable to the commissioner, on the DFPI Debt Collection Licensing Act surety bond form.
• File the bond as DFPI directs, which may be electronically through the NMLS electronic surety bond function.
• Calendar March 15 for the annual report required by section 100021.

Detailed Information About the California Debt Collection ($25,000) - NMLS Bond:

The amount is a floor with a discretionary ceiling

Section 100019(e) states the requirement as a minimum amount of twenty-five thousand dollars. It then gives the commissioner authority to require a higher bond amount for a licensee based on the number of affiliates under the license and the dollar amount of collecting consumer debt by that licensee.

That is the tier, and it is not published as a schedule. There are no revenue bands to look up. A single entity collecting a modest volume sits at $25,000. A licensee with many affiliates operating under one license and large collection volume can be asked for more, and the ask comes from DFPI rather than from the surety.

What the bond is actually for

Read the purpose clause before assuming this works like a consumer protection bond. The statute says the bond shall be payable to the commissioner and shall be used for the recovery of expenses, fines and fees levied by the commissioner in accordance with this division.

That is a regulator facing instrument. It backstops what DFPI assesses against the licensee. It is not written as a fund that any consumer with a Rosenthal Act complaint draws from directly, and describing it that way to clients overstates what it does.

One license, not one per office

Section 100001(a) requires a license for the principal place of business and states that a separate license is not required for each individual branch office. The license may not be transferred or assigned.

So unlike dealer or remittance bonding schemes in other states, opening more offices does not add bonds. What can move the number is affiliates under the license and collection volume, which is a different lever entirely.

Who is outside the Act

Section 100001(b) exempts several categories, including depository institutions, persons licensed under Divisions 9 and 20 of the Financial Code, persons licensed under Division 4, Part 1 of the Business and Professions Code, rental-purchase entities, and trustees performing acts in a nonjudicial foreclosure.

Section 100001(c) goes further and takes certain activity outside the division altogether, including debt collection regulated under Division 12.5 of the Financial Code and the collection of covered commercial debt or covered commercial credit as defined in Title 1.6C of the Civil Code.

That last one matters for anyone whose book is business to business. Commercial claims covered by Title 1.6C are not the same thing as consumer debt collection under this division, and the licensing question turns on which you are actually doing.

What you will not find in section 100001 is a grandfather clause for an agency that was already collecting in California. The Act became operative January 1, 2022, and it reached existing collectors as well as new ones.

The bond is one duty among several

Section 100019 is a list of licensee duties, and the bond is subsection (e). The others sit alongside it: develop policies and procedures reasonably intended to promote compliance with the division, file with the commissioner any report the commissioner requires, comply with the division and any regulation or order of the commissioner, and submit to periodic examination by the commissioner.

None of those substitutes for the bond, and posting the bond does not soften any of them.

Filing and dates

DFPI licensing runs through the Nationwide Multistate Licensing System and Registry, and section 100019(e) authorizes the commissioner to require bonds, riders and endorsements to be submitted electronically through the NMLS electronic surety bond function. Where electronic surety bond filing applies, the surety uploads the bond in NMLS rather than mailing a paper original, which changes who has to be set up in the system before you can file.

DFPI publishes a Debt Collection Licensing Act surety bond form for the program. Section 100021 requires a licensee to file an annual report with the commissioner on or before March 15, covering items such as the number of debtor accounts purchased or collected, dollar amounts purchased and collected, portfolio values, net proceeds, whether the licensee operates as a debt collector or a debt buyer, and final judgments entered against it under the specified Civil Code sections.

The Act was added by SB 908, Stats. 2020, Ch. 163, effective January 1, 2021 and operative January 1, 2022, and section 100001 was amended effective January 1, 2025 by Stats. 2024, Ch. 522.

Eligibility and Requirements for a California Debt Collection ($25,000) - NMLS Bond:

• An insurer authorized to do business in California.
• Minimum amount of $25,000, or a higher amount if the commissioner requires one.
• Payable to the Commissioner of Financial Protection and Innovation.
• Used for the recovery of expenses, fines and fees levied by the commissioner under the Debt Collection Licensing Act.
• Written on the DFPI Debt Collection Licensing Act surety bond form.
• Licensee name on the bond matching the NMLS record and the license exactly.
• Submitted through the NMLS electronic surety bond function where the commissioner requires it.
• Financial underwriting of the company. At this class the surety reviews financial statements, collection volume and regulatory history alongside owner credit.

California Debt Collection ($25,000) - NMLS Bond FAQs:

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