Monthly Bulletin – October 2024
Volume 12, Number 3
DFPI Announces Enforcement Actions Against Student Loan Debt Relief Companies, Secures Consumer Refunds and Penalties
The California Department of Financial Protection and Innovation (DFPI) announced enforcement actions against three companies to prevent them from unlawfully charging fees for student loan debt relief services to California consumers before any actual work has been performed. The companies are Financial Enhancement Services, Inc., The Firm Alternative LLC dba DocuPrep Xpress, and Total Rain Inc. dba Student Aid Group.
Each company was ordered to desist and refrain from engaging in unlawful student loan debt relief practices and soliciting and collecting advance fees prior to providing student loan debt relief services. In addition, the companies were directed to rescind all outstanding contracts with California consumers, issue refunds, and pay total penalties of $260,000. To date, the DFPI has also secured $85,000 in customer refunds through its agreement with The Firm Alternative LLC dba DocuPrep Xpress.
Governor Newsom Signs Consumer Protection Bills
On Sept. 24, Governor Gavin Newsom signed a package of bills that will strengthen protections for consumers, addressing issues that have put financial strain on Californians while setting new standards for transparency and accountability across industries. Highlighted bills include:
AB 2017 by Assemblymember Tim Grayson (D-Concord) prohibits certain banks and credit unions from charging nonsufficient funds fees when a transaction is declined due to the consumer having insufficient funds. The bill takes effect on January 1, 2026.
SB 1075 by Senator Steven Bradford (D-Gardena) sets limits on the amount credit unions can charge for overdraft fees. These bills aim to protect lower-income Californians that are disproportionately impacted by financial fees that can push them deeper into financial hardship.
SB 1286 by Senator Dave Min (D-Irvine) extends California’s Rosenthal Fair Debt Collection Practices Act to apply to certain commercial financial products. The bill adds specified commercial debts to the scope of the Rosenthal Act, which would grant the same protections to persons owing these commercial debts as are provided by existing law to persons owing consumer debt. The bill takes effect on July 1, 2025.
SB 919 by Senator Umberg (D- Santa Ana) requires franchise brokers, or third-party franchise sellers, who do business in California to register with the DFPI beginning July 1, 2026, or the first anniversary of the date by which the program is funded. The new law will help prospective franchisees be better able to evaluate franchise opportunities and make investment choices.
DFAL Implementation Extended, 2nd Invitation to Comment Ends Nov. 18
On Sept. 29, Governor Gavin Newsom signed AB 1934, which delays the operative licensing date of the Digital Financial Assets Law (DFAL) by one year, from July 1, 2025, to July 1, 2026. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from the DFPI by this July 1, 2026, deadline.
AB 1934 included additional requirements for licensees, such as maintaining customer financial records and compliance records. The bill also requires a licensee to maintain a monthly report that shows a stablecoin issuer has complied with stablecoin reserve requirements under DFAL.
The DFPI is now inviting public comments related to the DFAL license application, application fees, and other topics by November 18, 2024. Learn more about DFAL or submit a comment at dfpi.ca.gov/dfal.
FRANSES Set to Launch in February 2025
As a part of its ongoing effort to modernize technology infrastructure, the DFPI plans to launch a new Franchise and Securities Electronic Submission (FRANSES) system in February 2025. Some improvements franchise and securities filers will experience include:
- Increased visibility into filing, including enhanced communications, and status updates.
- Consolidated log-in structure so that account users may manage several organizations with a single account rather than separate accounts for each organization.
- User account management whereby an authorized representative may assign delegated users certain access rights when filing applications and notices.
- Online filing capability for most section codes, reducing the need for uploading .pdf versions of the section code forms.
- Enhanced reporting and statistics.
To receive upcoming communications about FRANSES, subscribe on the DFPI website. On the subscription page, select For Industry, then FRANSES under the Information, Resources, & Online Tools heading. For specific questions, please contact SRD_Support@dfpi.ca.gov.
Proposed Second Modifications to Debt Collection Licensing Act Regulations
On February 9, 2024, the Commissioner published a Notice of Proposed Rulemaking under the Debt Collection Licensing Act. The proposed rulemaking defines “net proceeds” for the purpose of determining a licensee’s annual assessment and sets forth information to be included in a licensee’s annual report. In response to comments, the Commissioner sought comments on proposed first modifications on June 17, 2024.
In response to comments received on the proposed first modifications, the Commissioner issued a Notice of Second Modifications and proposed Second Modified Text on Sept. 11, 2024. The deadline to submit comments on the second modified rules ended on Sept. 27, 2024, and the Commissioner is currently evaluating the comments.
Upcoming Consumer Education Events
Each month we educate consumers through community events and a monthly consumer financial education webinar.
Healing Financial Stress and Trauma
Nov 6, 12 – 1 p.m. | Virtual
Financial difficulties can have a significant impact on your emotional and mental well-being. Learn to manage how to manage financial stress, recover from trauma, and start emotional healing. Gain the confidence and resilience to cultivate a healthier relationship with money and rebuild your financial future. Guest speaker: Samuel Molina, CEO of the Academy of Financial Education. Register online.
Senior Scam Stopper with Asm. Tri Ta (AD 70)
Oct. 25, 2:30 – 4:30 p.m. | Westminster
Senior Scam Prevention Seminar with Asm. Diane Dixon (AD 72)
Oct. 28, 9 – 11 a.m. | Laguna Hills
Oct. 29, | 11 a.m. – 12 p.m. | Virtual
LICENSEE ACTIVITY
Commercial Bank Activity
New Bank
Quantum Bank
Proposed location: Street address to be determined in Downtown Los Angeles
Correspondent: James B. Jones
Carpenter & Company, 23 Corporate Plaza Drive, Suite 150, #D-11, Newport Beach, CA 92660
Phone: 949-261-8888
Application amended: 9/13/24 – name changed from QIB BANK
Merger
1st Capital Bank, Salinas, to merge with and into Santa Cruz County Bank, Santa Cruz
Approved: 9/19/24
Community Bank of the BAY, Oakland, to merge with and into Commercial Bank of California, Irvine
Approved: 9/10/24
Credit Union Activity
Merger
LA Financial Federal Credit Union, Arcadia, to merge with and into Credit Union of Southern California, Anaheim
Filed: 9/04/24
Change of Name
Pacific Postal Credit Union, to change its name to F3 Credit Union
Filed: 9/03/24
Foreign (Other Nation) Bank Activity
New Office
ID Bank CJSC
655 North Central Avenue, Glendale (Representative Office)
Filed: 9/16/24
Foreign (Other State) Bank Activity
New Office
Emigrant Bank
8730 West Sunset Boulevard, West Hollywood (Facility – insured bank)
Opened: 7/25/22
Money Transmitter Activity
New Transmitter
Affirm Payments, LLC
Opened: 9/05/24
Bivo Inc.
Filed: 9/19/24
Booking Holdings Financial Services USA LLC
Approved: 9/16/24
PayNearMe Financial, Inc.
Filed: 9/19/24
X Payments LLC
Opened: 9/16/24
Acquisition of Control
Thunes Financial Services Inc. to acquire control of Tilia LLC
Filed: 9/27/24
CLOTHILDE V. HEWLETT Commissioner, Department of Financial Protection and Innovation
The October 2024 Monthly Bulletin covers the month ended September 30, 2024.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
To subscribe, go to: https://public.govdelivery.com/accounts/CADFI/subscriber/new.