California’s DFPI Begins to Use its New Powers and Hire New Staff

We previously posted about California’s new Department of Financial Protection and Innovation (“DFPI”) (formerly Department of Business Oversight) and some of its new powers to regulate debt collectors and other financial institutions under the Debt Collection Licensing Act and California Consumer Financial Protection Law (“CFPL”) (also known as the mini-CFPB). Both laws took effect on January 1, 2021. While the process for the registration of debt collectors and newly covered persons under the CFPL is still in the works, the DFPI has already begun to use some of its new powers.

In a press release issued on January 19, 2021, the DFPI announced it issued a dozen subpoenas to third party debt collectors who the DFPI claimed were “potentially engaged in unlawful, unfair, deceptive, or abusive debt collection practices in California based on consumer complaints.” According to the DFPI, this represents the first major action under the CFPL.

Earlier, in it’s January 2021 bulletin, the DFPI announced it planned to immediately exercise its new powers: “[b]eginning immediately, the DFPI will review and investigate consumer complaints against previously unregulated financial products and services, including debt collectors, credit repair and consumer credit reporting agencies, debt relief companies, rent to own contractors, private school financing, and more.”

In a January 4 press release, the DFPI also indicated that to “focus on these new activities and expanded charge, the DFPI will hire 90 additional employees over the next three years.” These 90 additional employees represent a 13% increase. On the DFPI website, there are already a number of openings for enforcement attorney positions, and according to some sources, out of the 90 new employees, the DFPI is looking to hire 10 enforcement attorneys.

While the full extent of the DFPI’s new powers is still being fleshed out, early indications are that the DFPI plans to aggressively pursue newly covered entities under the CFPL and DCLA. Severson & Werson will continue to monitor developments with the CFPL, DCLA, and the DFPI.