During the financial chaos of the Pandemic, Governor Newsome introduced proposed the California Consumer Financial Protection Law, which was ultimately passed on August 31, 2020, and which ultimately created California’s brand-spankin’ new, Department of Financial Protection and Innovation, or “DFPI”. So, the question is does the agency live up to the name of the law that created it — i.e., does it offer us anything in the way of consumer financial protection?
You, DFPI, Are No S.H.I.E.L.D.
Right off the bat, one has to acknowledge that the acronym “DFPI” by itself falls short. It’s no “S.H.I.E.L.D” just to offer a random comparison. This might sound like a trivial criticism, but those in the know, recognize that ultimately it is the acronym that is most important about any government entity.
S.H.I.E.L.D. itself has kept its all-important acronym despite the fact that the words associated with those iconic letters frequently change, having gone from Supreme Headquarters International Espionage Law-Enforcement Division to the more recent Strategic Homeland Intervention Enforcement and Logistics Division, with several other iterations between these two endpoints. Unlike S.H.I.E.L.D, the acronym for the DFPI does not create a cool word and is not even pronounceable other than to articulate the name of each letter.
Lame name, Newsom. I for one expect better from my elected representatives.
The question, then, is can the DFPI help us in spite of its lackluster nomenclature? It is too early to give a definitive answer, but I hold out hope. (I always hold out hope — it’s what I do). Here, I think, are the ways in which I believe the DFPI might be useful to us, now and in the future:
The DFPI Lets You Look Up If A Debt Collector Can Legally Operate In California
At around the same time as the legislation was passed that created the DFPI, the California legislature also passed the Debt Collection Licensing Act, which requires all debt collectors operating in California to be licensed. Appropriately, DFPI is tasked with doing the licensing and oversight. If an entity has not obtained such a license, it cannot engage in debt collection in California. Now, this is a pretty new law at the time of this writing, and so a transitional period is built-in as follows: If a debt collector applied for a license by December 31, 2021, then they are provisionally allowed to continue their collection activities, pending the denial or approval of their application (a process that the DFPI advises might continue throughout 2022 and 2023).
This is all helpful because you can look up whether the debt collector contacting you is appropriately licensed (or if it is allowed to collect under the transitional provision described above). If the debt collector is not allowed to engage in collection activity in California, then that can be some useful leverage for you. How you use this leverage will depend upon the exact circumstances, and might be something you want to talk to an attorney about before adopting a strategy that might fail or even backfire. Suffice it to say, that the information that a debt collector is not allowed to operate in California, might be useful.
For the curious, the entities against which I most commonly defend consumers in debt collection cases, all filed timely license applications (damn), to wit, Hunt & Henriques, Mandarich Law Group, Nelson & Kennard, Law Offices of Harris and Zide, Portfolio Recovery Associates, Midland Credit Management / Midland Funding, Cavalry SPV I, and all the gang.
You Can File a Complaint With the DFPI About Improper Debt Collector Conduct
If you are faced with improper conduct by a debt collector, the DFPI provides an easy online form where you can complain to the DFPI about that collector. The DFPI contends that it uses the information from these complaints as a factor in determining whether to engage in legal enforcement action against debt collectors, which it says “may include administrative orders to: stop violations of laws; deny, suspend or revoke licenses; take possession of licenses; suspend or bar individuals from participating in a regulated industry; order refunds; and levy penalties.”
So, potentially some serious stuff. We’ll see how it all pans out.
A caveat is in order though: Filing a complaint is not guaranteed to be a beneficial action for you, personally (although it might be). You are likely to be unrepresented by counsel when you file such a complaint, and you might say something that would be against your own interests in connection with a collection dispute. This is important because a complaint you file with the DFPI is not strictly confidential. To put it bluntly, you might inadvertently say something stupid, that could come back to haunt you if you are — or later become — involved in any type of litigation with that debt collector (for example if they sue you to collect an alleged debt and you have admitted owing that debt in your DFPI complaint).
It’s good that the complaint process exists, and there might definitely be times when this can be used effectively against debt collectors who step over the line. Just be careful about whether the content of the complaint, or a follow-up investigation, would put you in a compromised position.
The DFPI Can Turn the Screws On Abusive Debt Collectors
The DFPI’s enforcement powers are unlikely to help you, specifically, in any particular specific situation, because the staff of the DFPI is tiny, and the number of violations is vast. However, we can hope that the major and repeated violations by the worst offenders percolate to the top and that the DFPI uses its enforcement powers in a way that helps all of us in a general sense.
Use the DFPI database to verify whether the debt collector contacting you is allowed to operate in California. Consider filing a complaint with the DFPI under appropriate circumstances (but don’t jump into this). Keep an eye on DFPI enforcement actions so that we can revel in the schadenfreude, when applicable.