California Consumer Financial Protection Law: commercial financing.

Plain English Breakdown

The official source material does not provide specific penalties or enforcement mechanisms for violations, nor does it specify consequences for failing to register as required.

California Law to Protect Small Businesses from Bad Financial Practices

This law expands the California Consumer Financial Protection Law (CCFPL) to protect small businesses by requiring companies offering commercial financing to register with the state and follow certain rules.

What This Bill Does

• Expands the CCFPL to include protections for small businesses from abusive financial practices.
• Requires the Department of Financial Protection and Innovation to create registration requirements for companies providing commercial financing products.
• Prohibits anyone from offering or providing commercial financing without registering with the state starting January 1, 2027.
• Forbids commercial financing providers from taking a confession of judgment or power of attorney before a default occurs.

Who It Names or Affects

• Small businesses that receive commercial financing products.
• Companies and individuals who offer commercial financing products in California.

Terms To Know

Commercial Financing

Money or credit given to a business for its operations, usually with terms like interest rates and repayment schedules.

Confession of Judgment

A legal document that allows someone to admit they owe money without going to court.

Limits and Unknowns

• The bill does not specify what happens if a company fails to register as required.
• It is unclear how the new rules will be enforced or what penalties might apply for violations.
• The exact details of the registration requirements are yet to be determined by the Department of Financial Protection and Innovation.

Official Summary Text

SB 728, as amended, Padilla.
California Consumer Financial Protection Law: commercial financing.
Existing law, the California Consumer Financial Protection Law (CCFPL), establishes certain consumer protections relating to consumer financial products, practices, and services, including, among others, making it unlawful for covered persons or service providers, as defined, to, among other acts, engage in unlawful, unfair, deceptive, or abusive acts or practices with respect to consumer financial products or services. Existing law establishes that the purpose of the CCFPL is to promote consumer welfare, fair competition, and wealth creation in this state by promoting, among other things, nondiscriminatory access to consumer financial products and services that are understandable and not unfair, deceptive, or abusive. Existing law authorizes the Department of Financial Protection and Innovation, under the direction of the Commissioner of Financial Protection and Innovation, to
prescribe rules regarding registration requirements applicable to a covered person in the business of offering or providing a consumer financial product or service, as defined, and rules requiring the payment of registration fees.
This bill would expand the purposes of the CCFPL to include the protection of small businesses from abusive financial practices, as specified. The bill would require the department to prescribe rules regarding registration requirements applicable to covered persons seeking to offer or provide commercial financing products, as defined and specified. The bill would, commencing January 1, 2027, prohibit a person from engaging in the business of offering to provide or providing commercial financing products without first registering with the commissioner, as specified. The bill would impose various duties on commercial financing providers and brokers, including, among other things, prohibiting the taking of a confession of judgment or power of
attorney at any time before a default, as specified. The bill would make various conforming changes.

Current Bill Text

Download Bill PDF