California Leads the way in Consumer Protection; Especially with Debt Collectors, obtaining close to $1 Million in restitutions

Photo courtesy of California.Gov and DPFI

The State of California is making strides, leading the way in consumer protection. Under the newly formed Department of Financial Protection and Innovation (DFPI), this currently established department has collected close to $1 million dollars in restitution for consumers. 

The DFPI has fielded hundreds of additional complaints related to the law. And it has launched more than 100 investigations using its expanded authority under the California Consumer Financial Protection Law (CCFPL).

Image courtesy of DPFI & State of California media office reps.
In 2020, the California State Legislature passed the CCFPL  – formally referred to as AB 1864. This new law provided the DFPI with the appropriate authority to oversee areas of the financial marketplace, that was previously unregulated by the DFPI. It included debt collectors, credit repair, debt relief companies, private postsecondary student loan products, and financial tech services that also include early wage access products. 
DPFI’s ability to obtain close to $1 million in restitution to California consumers was accomplished in just one year after implementing one of the most expansive consumer protection laws in the country. In addition to this the DPFI has also initiated the licensing/regulating of debt collectors.
According to IBISWorld, California ranks among the highest in the United States as having the most debt collection agencies. Before the onset of COVID-19, the Survey of Consumer Finances, found that the average (mean) household debt among those who had any debt was $140,416. The median was $65,000. That includes a wide range of debt, from mortgages to personal loans, credit cards and more.
This is one of the reasons why debt collection is high on the Department’s priority list. As noted by JDSupra an analytical info platformIn the initiative to address debt collection, the DPFI formed a debt collection advisory committee. The seven-member committee are appointed for two years. The members include consumer advocates, debt-buyers, third-party collectors, and a debt collection law firm.
The purpose… as JDSupra noted, is to provide critical feedback to the Department as it stands up its debt collection licensing program.

“The Department has made substantial progress in its first year to implement the new law, (AB 1864) expand protection for consumers, and foster responsible financial innovation,” said Clothilde V. Hewlett, DFPI Commissioner.

Appointed to the position by Governor Gavin Newsom in September 2021, Hewlett has served California under three different governors. For more than 20 years Hewlett has dedicated much of her career to protecting consumers. Serving as Undersecretary of the State and Consumer Services Agency and Interim Director of the Department of General Services, Hewlett managed numerous state agencies with a wide range of oversight that included procurement, real estate, and consumer affairs.

DFPI Commissioner Hewlett, photo courtesy of DFPI

She led the team during California’s 2001 energy crisis, creating the Flex Your Power Campaign. During the events of Sept. 11, 2001, she was responsible for oversight of the state of California Victim Compensation Board, providing support to survivors and families who lost loved ones during the terrorist attack. Prior to her appointment at the California DFPI, Commissioner Hewlett served as a board member for the Cal Alumni Association (CAA).

Among the many things the DFPI has created, in a short span of time is a research team to help the Department identify emerging financial activities. These activities include: scouting for unlawful, unfair, deceptive, and abusive practices. And as a result, make policy recommendations based on consumer impact.

Included on the list with debt collection, the Department’s top categories of complaints are: cryptocurrency, “neo banks,” and financial technology, or “fintech” service providers. Fintech is a partnering firm with banks to offer deposit account services. The top complaints the Department has received appears to have been driven by communications efforts to raise awareness about the DFPI’s expanded authority and mission.

The DFPI has also actively reminded the debt collection industry of COVID-19-related mortgage and rental protections available to California consumers. 

 “We remain committed to accomplishing the goals of Governor Gavin Newsom,” said DFPI Commissioner Hewlett. “And we are grateful to all stakeholders, including the Legislature, consumer advocates, industry partners, small businesses, community-based organizations, and many others for their continued input and support.”  To learn more about California’s efforts to protect and advocate for consumers visit the DFPI website.