You did not read that wrong. Most payday lenders do NOT have to follow federal debt collection laws. How is that possible?
The Federal Fair Debt Collection Practices Act (“FDCPA”) only applies to third party debt collectors. Since most of these high risk lenders handle their own collections work, they are not subject to the FDCPA. Thus, the borrower will not have he same protections he or she may have with other types of loans.
In other words, if you take out a loan from CashCall and CashCall calls you to collect the money, they do not have to follow the FDCPA. They do, on the other hand, have to follow the Rosenthal Act (Rosenthal FDCPA or RFDCPA). Why is that?
The federal FDCPA does not apply to an original creditor. However, the Rosenthal Act specifically applies to original creditors and to third party debt collectors. Thus, you still have some protection in California, but not as much as you would have under the FDCPA.