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On October 17, 2025, the California Department of Financial Protection and Innovation (DFPI) entered a consent order with a licensed consumer lender, alleging violations of the Fair Access to Credit Act, which amended the California Financing Law to cap interest rates and fees on consumer loans between $2,500 and $10,000.The DFPI alleged that the lender charged rates and administrative fees above those limits and continued the practice as recently as January 2023.
The DFPI's investigation identified multiple violations of the Fair Access to Credit Act, including:
- Exceeding rate and fee limits. The lender allegedly charged interest and administrative fees above the Act's 36% annual cap plus the federal funds rate.
- Improper inclusion of administrative fees. The DFPI found that the lender failed to treat administrative fees as part of the total cost of credit, resulting in effective rates that exceeded statutory limits.
- Conditioned refunds. The lender's refund notices allegedly required borrowers to take affirmative steps to receive repayment, contrary to DFPI expectations that refunds be automatic.
The company agreed to pay a $1 million penalty and $5,500 in investigative costs.It also must cease collecting unlawful charges, vacate or amend judgments that included impermissible amounts, and issue all outstanding borrower refunds totaling $218,000.
Putting It Into Practice: California continues to be active in enforcing its consumer protection laws (previously discussed here and here). The DFPI has repeatedly used its authority under the California Financing Law to address rate, fee, and collection issues across the lending market.Licensed lenders should maintain robust compliance programs that account for state-specific limits and ensure refund and recovery practices align with state requirements.
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