Governor Newsom Signs Legislation Establishing Nation’s Strongest State Consumer Financial Protection Watchdog
AB 1864 Establishes the Department of Financial Protection and Innovation – modeled directly after the federal agency championed by President Obama and Senator Warren – to Fight Financial Predators and Cultivate Consumer-Serving Innovation
SB 908 establishes a licensing law to specifically regulate debt collectors
AB 376 creates Student Borrower Bill of Rights
AB 70 cracks down on for-profit colleges that disguise themselves as non-profit institutions in order to skirt student protections
SACRAMENTO — Governor Gavin Newsom today signed twelve bills to protect consumers from financial predators and abusive business practices
Central to the package is AB 1864, a law that significantly expands the state’s ability to protect Californians against abusive and predatory financial products and services. The bill establishes the Department of Financial Protection and Innovation (DFPI), adding 90 positions over the next three years to transform the agency into California’s version of the federal Consumer Financial Protection Bureau, the agency championed by President Obama and Senator Warren. The DFPI will
- Significantly expand the state’s consumer protection capacity by adding dozens of investigators and attorneys to supervise financial institutions and crack down on financial predators;
- Create a team to monitor markets to proactively identify emerging risks to consumers;
- Create a team dedicated to consumer education and outreach, listening and responding to consumers in specific communities, including veterans, immigrants, and older Californians; and
- Create a new Office of Financial Technology and Innovation, which will cultivate financial technology to serve – not exploit – consumers
The law also expands the state’s power to target unfair, deceptive and abusive acts and practices by financial service providers – such as debt collectors and emerging financial technology products. The creation of the department was a key idea in the Governor’s January 2020-2021 budget proposal.
The Governor was joined at the virtual signing ceremony by Congresswoman Katie Porter, Assemblymember Monique Limón (D-Santa Barbara), Senator Holly Mitchell (D-Los Angeles), and Senator Bob Wieckowski (D-Fremont)
“While the federal government is getting out of the financial protection business, California is leaning into it,” said Governor Gavin Newsom. “It’s at this moment especially – when so many Californians are strapped for cash and struggling to pay their bills – that families are likely to fall victim to predatory and abusive financial products. These bills ensure that financial predators are subjected to alert oversight and agile enforcement.
“This historic bill will strengthen our state’s economy by adding guardrails to our capitalist system so that it creates prosperity for all Californians,” Congresswoman Porter said. “As the California Monitor for the National Mortgage Settlement and a longtime consumer protection attorney, I know how important it is to have a watchdog to shield working families from corporate abuse. We’re fortunate to have Governor Newsom and Assemblymember Limón leading the way in cracking down on scam artists trying to take advantage of California families.”
“I applaud Governor Newsom for signing this first-in-the-nation consumer protection legislation. As the Chair of the Banking and Finance Committee, I have continued to work to protect consumers from predatory lenders, high-interest rates, and aggressive debt collectors, which is especially critical to do during these challenging times,” said Assemblymember Limón. “As the fifth largest economy in the world, the consumer protection standards we establish in California can ripple across the country, benefiting all consumer and families in our State.”
“As chair of the Senate Budget and Fiscal Review Committee, I am pleased to be part of the signing of AB 1864, which is an important measure to protect consumers in our state that was deliberated through the Legislative budget process this year. Because of AB 1864, the Department of Business Oversight will be rebranded as the Department of Financial Protection and Innovation and the powers of the department will be expanded to ensure that there is proper oversight of all financial products and services in California. This is even more critical during tough economic times as low-income and minority communities are often targeted by bad actors,” said Senator Holly Mitchell.
“I applaud the Governor for stepping up and having consumers’ backs by signing the California Consumer Financial Protection Law. At a time when the President is weakening the federal bureau, Governor Newsom is filling that leadership void for Californians. The law will crack down on those who seek to abuse consumers, disregard their rights, and strip them of their hard-earned money. I am proud to say I supported AB 1864,” said Senator Bob Wieckowski.
Other bills signed by Governor Newsom today protect students from abusive practices. AB 376 creates the Student Borrower Bill of Rights and provides borrowers with enforceable protections against abusive lending practices. AB 70 prevents for-profit colleges from using shell non-profit corporations to skirt state student protections and state regulations.
In addition to AB 1864, Governor Newsom also signed the following consumer protection bills:
- AB 70 by Assemblymember Marc Berman (D-Menlo Park) – Private postsecondary education: California Private Postsecondary Education Act of 2009.
- AB 376 by Assemblymember Mark Stone (D-Scotts Valley) – Student loan servicing.
- AB 499 by Assemblymember Chad Mayes (I-Rancho Mirage) – Personal information: social security numbers: state agencies.
- AB 1551 by Assemblymember Joaquin Arambula (D-Fresno) – Property assessments: requirements and disclosures.
- AB 2471 by Assemblymember Brian Maienschein (D-San Diego) – Senior citizens: rescission of contracts.
- AB 2524 by Assemblymember Buffy Wicks (D-Oakland) – Check Sellers, Bill Payers and Proraters Law: out-of-state activities.
- AB 2559 by Assemblymember Rebecca Bauer-Kahan (D-Orinda) – California Financing Law: enforcement and penalties.
- AB 3254 by Assemblymember Monique Limón (D-Santa Barbara) – Contracts: translations.
- SB 342 by Senator Bob Hertzberg (D-Van Nuys) – Misleading advertising: domain and subdomain names.
- SB 908 by Senator Bob Wieckowski (D-Fremont) – Debt collectors: licensing and regulation: Debt Collection Licensing Act.
- SB 1117 by Senator Bill Monning (D-Carmel) – Master-meter customers: electrical or gas service.