On December 14, the California Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with an LA-based auto title lender to resolve allegations that the company violated California’s the Fair Access to Credit Act’s (FACA), which prohibits making loans of $2,500 to $10,000 with interest rates greater than 36 percent.  The focus of the consent order was the auto title lender’s partnership with a Utah state-chartered bank to provide the bank with marketing and servicing services in connection with auto title loans offered to California consumers.  The company offered these services at the same time that FACA amended the California Financing Law to prohibit licensed lenders from making loans with principal amounts of $2,500 to less than $10,000 with interest rates greater than 36 percent, plus the federal funds rate.  The company was served a subpoena seeking documents and information last year to assess whether the company was evading California’s newly enacted interest rate caps through a partnership with the out-of-state bank.  After the investigation, the company ceased marketing auto loans of less than $10,000 to California borrowers.

Continue Reading DFPI Issues Consent Order to Auto Title Lender

On November 16, the California DFPI released Version 2.0 of its Annual Report of Finance Lenders, Brokers and PACE Administrators Licensed under the California Financing Law (CFL).  The Annual Report examined unaudited data gathered from finance lenders, brokers, and Property Assessed Clean Energy (PACE) administrators licensed under the CFL, as well as new data from the “buy now, pay later” or BNPL industry.

Continue Reading DFPI Reports Increase in Consumer Loans Under $2,500, Decrease in Consumer Loans Between $2,500 and $10,000

California Governor Newsom announced the appointment of Clothilde “Cloey” Hewlett as the next Commissioner of the Department of Financial Protection and Innovation (DFPI).  She will start after Thanksgiving, when she will take over for the Acting Commissioner, Christopher Shultz.  Hewlett is the current Executive Director and Chief Legal Officer for the Cal Alumni Association, and previously served as Undersecretary of the State and Consumer Services Agency and Interim Director of the Department of General Services.  She also has extensive enforcement experience, previously serving as an Assistant District Attorney for the San Francisco District Attorney’s Office, Criminal Investigator with the City and County of San Francisco, and Director of Moral Character Determinations for the State Bar of California.  Ms. Hewlett’s appointment is subject to confirmation by the California Senate within one year.

Continue Reading New Commissioner Appointed to lead CA DFPI: Cloey Hewlett

Licensees and applicants under the California Financing Law are reminded of the following:

  • Licensees under the California Financing Law not currently on NMLS must transition onto NMLS by December 31, 2021.
  • New applicants under the California Financing Law may only apply through NMLS.
  • Existing licensees under the California Financing Law on NMLS must convert to an electronic surety bond through NMLS.


Continue Reading NMLS Transition for California Financing Law Licensees: December 31, 2021 Deadline

Last month we wrote a blog relating to a consent order entered into by the California Department of Financial Protection and Innovation (DFPI) with a servicer of income share agreements.  The DFPI determined that, despite claims by the provider to the contrary, the income share agreements are student loans that subject the provider to California’s licensing requirements.  It did not take long for the CFPB to enter the fray.  On September 7, the CFPB entered into a consent order with Better Future Forward, Inc. and various affiliates (collectively BFF) in which the CFPB determined that the company:

Continue Reading Are Income Share Agreements Loans? The CFPB Says Yes

On September 1, the CFPB issued a Notice of Proposed Rulemaking (NPRM) to implement Section 1071 of the Dodd-Frank Act, which amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to collect and report data regarding credit applications made by women-owned, minority-owned, and small businesses (we previously discussed the proposed rule in an earlier Consumer Finance & FinTech Blog post here).  The proposed rulemaking is an expansive 918 pages and the CFPB provides both a summary and table of contents to assist industry participants in their review and comments.

Continue Reading CFPB Issues Proposed Rule Under Section 1071 of Dodd-Frank to Collect Small Business Lending Data

On August 5, California’s Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with a New York-based FinTech company that offers student Income Share Agreements (ISAs) to finance post-secondary education and training.  According to the DFPI, it is the first agreement to subject an ISA provider to state licensing and regulation.  The agreement reflects the DFPI’s decision to treat these private financing products as student loans for the purpose of the California Student Loan Servicing Act (SLSA).  Below are significant highlights from the agreement:

  • The DFPI found that the SLSA defines “student loans” broadly to include “any loan” or “extension of credit” and does not exclude contingent debt.
  • Under the ISAs, students agree to repay a school a fixed percentage of their future gross income after graduation, but only if the student is employed and making more than an agreed-upon amount.
  • The settlement provides that the DFPI will issue the company a conditional license under the SLSA based on its finding that ISAs are “student loans” for the purposes of the SLSA.


Continue Reading California Regulator Signals New Scrutiny of Student Lending Industry, Enters Into Consent Order with Servicer of Income Share Agreements