DFPI Marks Success in California Consumer Financial Protection Act Implementation

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SACRAMENTO, Calif. — A year after implementing one of the nation’s most sweeping consumer protection laws, the Department of Financial Protection and Innovation (DFPI) announced that it has raised nearly million in consumer restitution, filed hundreds of additional law-related complaints and launched more than 100 investigations using its expanded authority under the California Consumer Financial Protection Act (CCFPL).

The Department also created several new divisions to expand oversight and outreach, including the Consumer Financial Protection Division, Office of FinTech Innovation, Office of the Ombudsman, and a Focused Outreach Team. responsible for working with historically underserved communities that include veterans, seniors, students and immigrants.

“The Department has made substantial progress in its first year to implement the new law, expand consumer protections and foster responsible financial innovation,” said DFPI Commissioner Clothilde V. Hewlett. “We remain committed to achieving Governor Gavin Newsom’s goals and are grateful to all stakeholders, including the Legislative Assembly, consumer advocates, industry partners, small businesses, community organizations and many others. others for their continued contribution and support.”

In 2020, the legislature adopted the CCFPL as AB 1864 (Limón). Identifying gaps in consumer protection due to strict definitions in existing licensing laws, this new law gave the DFPI appropriate authority to oversee areas of the financial market previously not regulated by the DFPI, including agents collection companies, credit repair and debt relief companies, private post-secondary institutions. student loan products and fintech services that include salary early access products. The Department has also started licensing debt collectors.

The first change under the CCFPL was a new name for the Department which was previously the Business Surveillance Department. Over the past twelve months, the Department has had many key successes under the CCFPL. These can be found in a statutory report which has been published on the DFPI website: https://dfpi.ca.gov/wp-content/uploads/sites/337/2022/03/DFPI-CCFPL-2021-annual-report.pdf.

Key takeaways from the CCFPL report:

Enforcement

In its first year of authority under the CCFPL, the DFPI proactively identified enforcement targets and opened 106 investigations that resulted in 49 public actions under the CCFPL.

The DFPI’s investigations resulted in 49 public enforcement actions, $975,000 in consumer restitution, $547,500 in penalties, and included several “first of its kind” actions for the DFPI in debt collection, debt relief student debt, access to earned wages and private post-secondary education. education funding.

Regulatory activities

In 2021, the DFPI issued four Requests for Comments to solicit feedback from stakeholders on various aspects of CCFPL implementation. The DFPI received 76 comment letters.

At the end of 2021, the DFPI had three pending regulatory packages under the CCFPL: 1) Complaint Procedures, 2) UDAAP Trade Funding, and 3) Phase One Registration Categories.

The proposed registration includes debt settlement services, student debt relief services, post-secondary education financing and payday advances.

Market research and monitoring

In September 2021, the DFPI created a research team to help the DFPI identify emerging financial activities; detecting illegal, unfair, deceptive and abusive practices; and make policy recommendations based on consumer impact.

The research team assesses DFPI’s consumer complaints data to identify general market trends that may pose risks to consumers.

Handling consumer complaints

In 2021, the Consumer Services Office (CSO) received 638 complaints about products and services submitted to the CCFPL.

Complaints filed under the new law, which covered debt collection activities in the first year, increased every quarter with a dramatic increase in the second half of the year when CCFPL complaints increased by almost 140%.

The main categories of complaints included debt collection, cryptocurrency and “neo banks,” financial technology or “fintech” service providers, partnering with banks to offer deposit account services. The main complaints appear to have been motivated by communication efforts to raise awareness of the DFPI’s expanded authority and mission.

Financial Technology and Innovation Office

In 2021, the Office of Financial Technology and Innovation (OFTI) met with dozens of companies, venture capitalists, lawyers, industry advocacy groups, federal and state financial regulators, groups consumer advocates and academics to better understand stakeholder perspectives on what constitutes responsible innovation. in financial services.

The OFTI participated in more than a dozen public events to publicize the activities of the OFTI and extend the invitation to meet. The Bureau held weekly office hours, open to all who registered.

Communications and Outreach

In 2021, the DFPI organized three roundtables with community groups, dozens of external stakeholder meetings, presented on the subject at several events and conferences, and participated in dozens of media interviews to raise awareness about the expanded authority and work of the Department.

A communications provider selected to run a statewide communications campaign conducted four multilingual focus groups and launched its campaign in March 2022 with ads on radio, print, digital, social media and outdoors.

The Targeted Outreach Team participated in 141 events in 2021 with an estimated total attendance of over 9,700 people and distributed over 96,400 items of promotional and educational materials.

About the DFPI

The DFPI licenses and regulates state chartered banks and credit unions, commodity and investment advisers, issuers of funds, the offering and sale of securities and franchises, brokers, lenders to non-bank installments, payday lenders, mortgage lenders and managers, escrow companies, property Assessed Clean Energy (PACE) Program Administrators, debt collectors, credit repair and credit reporting agencies to consumer, debt relief companies, some lease-to-own providers, etc.

For more information on the DFPI, visit their website at https://dfpi.ca.gov/.

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