We have recently focused on the DFPI’s expanded authorities under California Consumer Protection Law, the Debt Collection Licensing Act, and the Student Borrower Bill of Rights. In addition to these blockbuster bills, this legislative session included a short bill impacting the DFPI’s enforcement authority under the California Financing Law (“CFL”), which has also been signed into law by Governor Newsom.
Under existing law, as part of its enforcement efforts, the DFPI is permitted to require attendance of witnesses and examine under oath all persons whose testimony it requires relative to loans, assessment contracts, or business regulated by the CFL. Beginning January 1, 2021, this authority is expanded so that the DFPI may require attendance of witnesses and examine under oath any person whose testimony relates to activities and businesses regulated by the CFL. The bill notes that this amendment “expands the crime of perjury.”
The new law will also expand the DFPI’s authority when seeking relief on behalf of consumers from persons engaging in unlicensed finance lender, broker, PACE program administrator or mortgage loan originator activities. Under existing law, the DFPI may order unlicensed persons to desist and refrain from engaging in the business requiring a license or from otherwise violating the CFL. Currently, the DFPI can only obtain ancillary relief for consumers stemming from this type of violation if it files a civil action or if it enters into a consent order. Under the new law, the DFPI will gain the authority to include a claim for ancillary remedies with the order to desist and refrain. The ancillary remedies may include, without limitation, refunds, restitution or disgorgement, or damages on behalf of persons injured.
Also, currently, when issuing a citation for a violation of the CFL in lieu of other administrative discipline, the DFPI may issue an order to desist and refrain and assess an administrative fine of $2,500. Such a citation is not to be reported as disciplinary action by the DFPI. Under the new law, the DFPI will gain the authority to seek the same ancillary remedies noted above when it issues such a citation. Additionally, the DFPI will no longer be prohibited from reporting the citation as a disciplinary action.
We will continue to track developments relating to the DFPI as it exercises its increased authorities under the various laws passed this year.
