TITLE: California Department of Financial Protection and Innovation Establishes Unfair, Deceptive, or Abusive Acts Standards for Commercial Financing Providers
BODY:
The California Department of Financial Protection and Innovation (DFPI) has established regulatory standards governing unfair, deceptive, or abusive acts and practices (UDAAP) in commercial financing and financial products offered to small businesses, nonprofits, and family farms under Title 10, Chapter X of the California Code of Regulations.
Under Section 90009.1, an act or practice is deemed unfair if it violates another law, causes harm that outweighs its utility, offends established public policy, or causes substantial injury that could not reasonably have been avoided. An act or practice is deceptive if a small business, nonprofit, or family farm is likely to be deceived by it. An act or practice is abusive if it interferes with the ability of these entities to understand terms or conditions of a financial product, or if it takes unreasonable advantage of their lack of understanding regarding material risks, costs, or conditions, their inability to protect their interests, or their reasonable reliance on the provider to act in their interests.
For purposes of these regulations, "small business" is defined consistent with California Code of Civil Procedure Section 1028.5; "nonprofit" means any organization organized under state law where no net earnings inure to the benefit of any owner or individual; and "family farm" follows the definition in 7 Code of Federal Regulations Part 761.2(b).
Section 90009.2 requires all persons engaged in offering or providing commercial financing or other financial products and services to small businesses, nonprofits, and family farms to file annual reports with the Commissioner on or before March 31. Reports must include transaction data by financing type, transaction count and dollar amounts, transaction breakdowns by loan size intervals, and cost metrics including minimum, maximum, average, and median total dollar costs.
REFERENCES:
California Code of Regulations, Title 10, Chapter X, Sections 90009.1 and 90009.2