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DFPI issues NPRM to implement process for handling consumer complaints and inquiries under the CCFPL

State Issues State Regulators DFPI California CCFPL Consumer Complaints Consumer Protection Agency Rule-Making & Guidance Consumer Finance

State Issues

Recently, the California Department of Financial Protection and Innovation (DFPI) issued a notice of proposed rulemaking (NPRM) to adopt regulations to implement and interpret certain sections of the California Consumer Financial Protection Law (CCFPL) related to consumer complaints and inquiries. (See also text of the proposed regulations here.) As previously covered by a Buckley Special Alert, AB 1864 was signed in 2020 to enact the CCFPL, which, among other things: (i) establishes UDAAP authority for DFPI; (ii) authorizes DFPI to impose penalties of $2,500 for “each act or omission” in violation of the law without a showing that the violation was willful, arguably representing an enhancement of DFPI’s enforcement powers in contrast to Dodd-Frank and existing California law; (iii) provides DFPI with broad discretion to determine what constitutes a “financial product or service” within the law’s coverage; and (iv) provides that administration of the law will be funded through the fees generated by the new registration process as well as fines, penalties, settlements, or judgments. While the CCFPL exempts certain entities (e.g., banks, credit unions, certain licensees), DFPI’s oversight authority was expanded to include debt collection, debt settlement, credit repair, check cashing, rent-to-own contracts, retail sales financing, consumer credit reporting, and lead generation.

The NPRM proposes new rules to implement section 90008, subdivisions (a), (b), and (d)(2)(D), of the CCFPL related to consumer complaints and inquires. According to DFPI’s notice, section 90008 subdivisions (a) and (b) authorize DFPI to promulgate rules establishing reasonable procedures for covered persons to provide timely responses to consumers and DFPI concerning consumer complaints and inquiries. Additionally, subdivision (d)(2)(D) “permits covered persons to withhold nonpublic or confidential information, including confidential supervisory information, in response to a consumer request to the covered person for information regarding a consumer financial product or service.”

Among other things, the NPRM:

  • Identifies entities exempt from the consumer complaints and inquiries requirements;
  • Requires covered persons to respond to consumer complaints and to establish policies and procedures for receiving and responding to complaints, including providing a complaint form, acknowledging receipt of complaints, tracking complaints, the timeline for responding to complaints, the contents for such a response, and recordkeeping of such complaints;
  • Sets forth requirements for responding to complaints, including documenting when complaints do not require further investigation, performing an investigation of a complaint if warranted, and requiring corrective action to resolve a complaint such as an account adjustment, credit, or refund, and appropriate steps to prevent recurrence of the issue, which may include policy changes and employee training;
  • Requires designation of an officer with primary responsibility for the complaint process;
  • Requires covered persons to submit to DFPI a quarterly complaint report, which will be made public, and an annual inquiries report;
  • Sets forth requirements for covered persons to respond to inquiries from consumers and develop and implement written policies and procedures for responding to such inquiries;
  • Provides that covered persons must develop and implement written policies and procedures for responding to requests from DFPI regarding consumer complaints; and
  • Exempts certain information, such as nonpublic or confidential information, including confidential supervisory information, from disclosure to consumers.  

Written comments on the NPRM are due by July 5.