Today, the DFPI issued a Notice of Proposed Rulemaking relevant to entities who may have to register with the DFPI under the CCFLP.  Comments are due by May 2, 2023.  In the DFPI’s purpose statement, the DFPI explained:

In September 2020, Governor Gavin Newsom signed Assembly Bill 1864, which codified the CCFPL in division 24 of the Financial Code and vested the DFPI with authority to administer and enforce its provisions. The CCFPL empowers the DFPI to “prescribe rules regarding registration requirements applicable to a covered person engaged in the business of offering or providing a consumer financial product or service…”  In connection with registration, the DFPI may require registration fees, rules to facilitate oversight of covered persons and detect risks to consumers, rules requiring registrants to obtain and provide records and produce reports, rules to ensure a covered person is a legitimate entity that can perform its obligations to consumers, and rules identifying unlawful, unfair, deceptive, or abusive acts and practices. The CCFPL also empowers the Commissioner to “investigate, research, analyze, and report on markets for consumer financial products or services.

The DFPI went on to explain

The CCFPL does not specify the registration, reporting, or other requirements for covered persons and authorizes the DFPI to prescribe these requirements by rulemaking. Through the proposed regulations described herein, the DFPI proposes to exercise its powers to require registration and reporting for providers of four products and services: Debt settlement, student debt relief, education financing, and income-based advances. The industries providing these products were selected for registration in part because they each serve economically vulnerable populations. Debt settlement and student debt relief providers necessarily serve “economically vulnerable consumers,” because providers’ clients are people struggling to pay their debts. Similarly, both student debt relief and education financing providers serve students, a population that the Legislature specifically identified as a “vulnerable population” when it described its intent in enacting the CCFPL. It appears that income-based advance providers similarly serve economically vulnerable populations living paycheck-to-paycheck who have limited alternatives for short-term cash. 8 Fin. Code, § 90000, subd. (a)(1).  The proposed regulations are intended to strengthen consumer protections in the financial services industry, particularly for vulnerable consumers. By requiring certain financial services providers to identify themselves and examining those providers for compliance with consumer financial protection laws, the DFPI will help protect California consumers. Data collected by providers will inform the DFPI’s examination priorities, assist the DFPI in identifying consumer risks, and ensure that providers are able to perform their obligations to consumers. The data will also help the Commissioner research, analyze, and report on markets for consumer financial products or services. Financial Code section 90009, subdivision (a)(2)(A), of the CCFPL exempts certain licensees who provide consumer financial products or services “within the scope of” their DFPI licenses. The CCFPL, however, does not specify which licensees are exempt from registration or prescribe the requirements for exemption. The proposed regulations specify that licensees under the CFL, CDDTL, and SLSA would be exempt from CCFPL registration and provide the conditions for exemption, including notice and reporting requirements.  Over the past decade, several new consumer financing products have emerged wherein financing providers offer advances to consumers to be repaid from consumers’ wages. These products include, but are not limited to, earned-wage advances and income-share agreements. The providers of these products have generally maintained that they are not subject to any existing consumer credit laws or regulations. Proposed section 1461 clarifies that such products, and any other products to be repaid from a consumer’s wages, salary, commissions, or compensation for services, are subject to the California Financing Law and its related consumer protections.

Copies of DFPI’s documents can be found here:

Notice of Proposed Rulemaking

DFPI Statement of Reasons

DFPI – Text of Proposed Rule