Monthly Bulletin – May 2024

2023 Report Shows Expanded Enforcement and Awareness Under Consumer Financial Protection Law

In 2020, California launched one of the most expansive consumer financial protection laws in the nation – the California Consumer Financial

Protection Law (CCFPL). Three years into its implementation, the 2023 CCFPL Annual Report key results include:

• Experienced a 70 percent increase in CCFPL-related consumer complaints. The top two CCFPL-related complaints involved crypto assets (41 percent) and debt collectors (36 percent).
• Opened 734 CCFPL-related investigations and issued 181 public CCFPL actions.
• Launched a nationally recognized web-based consumer protection tool, the Crypto Scam Tracker, to help Californians spot and avoid scams related to crypto assets.
• Implemented a new consumer complaints portal to improve complaint management, data quality, and enhance the consumer’s experience.

Some Escrow Reports Due May 15

Escrow agents are required to submit to the Commissioner an annual report prepared by an independent certified public accountant or an independent public accountant (Financial Code section 17406) within 105 days after the close of the escrow agent’s fiscal year. The annual report includes audited financial statements and required supplemental information.

If your fiscal year ended on January 31, 2024, your annual report is due May 15, 2024. Please have your CPA email your report to [email protected] by the deadline using a secured, encrypted delivery system. The use of a secured dropbox is also acceptable. If your CPA is unable to submit the annual report electronically, it can be mailed to Queen Padilla, Senior Financial Institutions Examiner, Escrow Law, Department of Financial Protection and Innovation, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.

Penalties for failure to file the annual report by the due date or to include required information are $100 per day for the first five days a report is late and $500 per day thereafter (Financial Code section 17408). Failure to file a report or to include any required information may also result in the suspension or revocation of an escrow agent’s license or prompt an immediate examination (Financial Code section 17602.5).

For questions about the annual reports, email [email protected].

​Escrow Annual Report Examination Billing Update

Effective immediately, escrow examiners’ review time for annual audit reports, starting with annual audit reports with fiscal year ended on December 31, 2023, will be billed to licensees in a separate invoice from a licensee’s examination invoice. Licensees should expect an invoice on a yearly basis with a minimum of two-hour review billing for their annual audit report at the current billable examination rate of $95 per hour.

This billing is authorized by Financial Code section 17405.1. Cost drivers of the invoice include but are not limited to the following: number of branches, unresolved trust account reconciling items, and number of deficiencies. This amended billing process removes the annual report review from a billable examination in an effort to streamline our regulatory examination and meet the requirement of the statutorily mandated examination cycle.

The DFPI communicated this billing process to industry members serving on the Escrow Law advisory committee in December 2023 and March 2024. Licensees should budget for this annual recurring cost to ensure the expenditure will not affect their company’s compliance with the financial requirements. Questions or inquiries about this notice should be directed to [email protected].

BDIA Online Examination Due May 17

The Broker-Dealer / Investment Adviser (BDIA) Division is continuing an annual online examination for certain registered Investment Advisers, in accordance with DFPI’s authority under California Corporations Code Section 25241, subdivision (c). This mandatory examination consists of an online examination for Investment Advisers registered with the DFPI that have their principal place of business in another state.

If selected, the advisory firm was notified on April 2 and is required to complete and submit the online examination by May 17, 2024. The Division will conduct the exam on a four-year cycle for these licensees. However, an Investment Adviser may be selected for a future examination sooner or later than the estimated four-year cycle.

If you have any questions or inquiries, please contact the Division at [email protected].

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DFPI Action Against MOHELA to Protect California Student Loan Borrowers

On April 24, the DFPI announced a consent order with the Higher Education Loan Authority of the State of Missouri (MOHELA) for failing to timely provide contact information for Californians with older student loans, whose last chance to qualify for debt relief ended on April 30. As part of the settlement, MOHELA agreed to pay administrative penalties of $27,500.

The DFPI sought borrower contact information from all 15 loan servicers that still service older student loans, such as Federal Family Education Loans and Perkins Loans, to ensure that Californians with these loans receive timely information about the looming deadline to consolidate. Unlike every other servicer contacted, MOHELA failed to turn over the information by the date requested, delaying DFPI’s efforts to reach affected California MOHELA borrowers by three weeks compared to borrowers with the other servicers.

The DFPI’s efforts ultimately reached more than 265,000 Californians total, including 1,542 MOHELA borrowers, with key information about how to apply by the deadline to qualify for relief. DFPI is the first state regulator to take public action against MOHELA for violating state consumer protection laws.

Recent DFPI Consumer Alerts

The DFPI has issued Consumer Alerts warning of various fraudulent schemes and scams:

• Credit Union Smishing Scam – Coast Central Credit Union (CCCU) received numerous calls from members and non-members indicating that they received fraudulent SMS text messages that purport to be from CCCU.
• Fraudulent Bank Website Scam – DFPI has received information about a fraudulent website posing as Bank of the Sierra. The correct web address for Bank of the Sierra is https://www.bankofthesierra.com. The imposter represents itself to the public as “bksierra.org”.
• Misrepresentation of a Department Legal Settlement – DFPI, which was formerly known as the Department of Business Oversight, reports that there is no licensed law firm in California called “Hartman Cain & Associates,” nor is the DFPI involved in a settlement with any entity using that name.
• Fake Names and Logos in a Scam Demanding “Authorization Fees” – DFPI has received information about scammers using a document claiming to be from the CA Department of Insurance (DOI) and the “California Department of EDFP Financial Protection and Innovation” and using the logo of the DFPI.

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NASCUS Cannabis Banking Symposium

The DFPI is sharing this information on behalf of the National Association of State Credit Union Supervisors (NASCUS). DFPI staff will attend the event, but any questions should be directed to NASCUS. 

NASCUS will host a symposium on Cannabis banking, a discussion of the latest advancements in marijuana and hemp banking, including the future of legalization, compliance, and the overall direction of the cannabis industry and banking requirements.

The symposium will be held at the Westin Long Beach Hotel in Long Beach, CA on June 11-12, 2024. To register for this event or learn more, please click here.

Consumer Webinar June 5

The DFPI hosts a monthly consumer financial education webinar exploring a new topic every month. Each webinar includes guest speakers and a Q&A session. Everyone who registers for these webinars will be emailed a link to the recording and a copy of the slides. Past presentations in the series may be viewed on the DFPI YouTube site.

The next webinar, “How to Invest Wisely,” is scheduled for June 5 at 12 p.m., PST (Registration].

This webinar will feature a tour of the DFPI’s soon-to-be-launched Investor Center website and get a step-by-step process to investing wisely. Also covered will be how to develop investment goals, understand risks and rewards, and protect from investment frauds and scams with free financial education courses, news, information, and resources.

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Commercial Bank Activity

Merger

Community West Bank, NA., Goleta, to merge with and into Central Valley Community Bank, Fresno, with the surviving bank to be renamed to Community West Bank
Effected: 4/1/24

Credit Union Activity

Merger

Central Coast Federal Credit Union, Seaside, to merge with and into Wescom Central Credit Union, Pasadena
Approved: 4/01/24
Effected: 4/01/24

Money Transmitter Activity

New Transmitter

Affirm Payments LLC
Approved: 4/24/24

Digital Wallet US LLC
Filed: 4/29/24

Acquisition of Control

BHN Holdings, Inc., to acquire control of Tango Card, Inc.
Approved: 4/16/24

Joao Vitor Nazareth Menin Teixeira Souza, to acquire control of Inter & Co Payments, Inc.
Approved: 4/08/24

Mini Tyrone, Inc., to acquire control of AllPaid, Inc.
Filed: 4/17/24

Change of Name

Continental Exchange Solutions, Inc., to change its name to Dandelion Payments, Inc.
Effected: 4/16/24