California Establishes New Consumer Financial Protection Agency

California Establishes New Consumer Financial Protection Agency

On September 25, California Governor Gavin Newsom signed AB 1864, which establishes the Department of Financial Protection and Innovation.  The Department is modeled after the federal Consumer Financial Protection Bureau (“CFPB”) and is designed to protect Californians from unfair, deceptive, and abusive financial practices.  Supporters of the Department say it will serve as a watchdog for low-income communities, seniors, and individuals who have suffered financial hardship due to the coronavirus (COVID-19) pandemic.  

AB 1864 expands the state’s power to target abusive practices by financial service providers, such as debt collectors and emerging financial technology products.  The Department will add 90 positions over the next three years to supervise financial institutions and address improper financial practices.  The Department will also create: (1) a team to monitor markets to identify emerging risks to consumers; (2) a team dedicated to consumer education and outreach; and (3) an Office of Financial Technology and Innovation that will develop financial technology to serve consumers. 

California is strengthening its consumer protection efforts at a time when the federal CFPB has scaled back its enforcement and oversight of consumer fraud.  The CFPB was initially created to oversee products like credits and home mortgages in the wake of the 2008 financial crisis.  

“While the federal government is getting out of the financial protection business, California is leaning into it,” said Governor Gavin Newsom. “It’s at this moment especially – when so many Californians are strapped for cash and struggling to pay their bills – that families are likely to fall victim to predatory and abusive financial products. These bills ensure that financial predators are subjected to alert oversight and agile enforcement.”

Minami Tamaki’s Consumer & Employee Rights Group litigates class actions and individual cases on behalf of consumers who have been harmed by illegal or unfair business practices.  For more information on Minami Tamaki’s consumer protection practice, you may contact us online or call us at 415-788-9000.

*The contents of this article is for general informational purposes only and does not constitute legal advice.  Information in this article may not constitute the most complete or up-to-date legal or other information.  Readers should contact a licensed California attorney to obtain advice with respect to any particular legal matter. Use of this website does not create an attorney-client relationship between the reader and Minami Tamaki LLP.

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