Regulation
Time to File Your Annual Commercial Financing Report in California
February 27, 2025March 15th is the deadline for covered commercial financing providers to file their first annual report with the State of California. According to the DFPI, “any person engaged in the business of offering or providing commercial financing or another financial product or service to a small business, nonprofit, or family farm whose business activities are principally directed or managed from California” is required to file the report.
Per the state on exemptions:
Covered providers, as defined in California Code of Regulations, title 10, section 1060(e), are required to file this report. If you are not a covered provider under section 1060(e)(2) because you conduct all commercial financing under the authority of your CFL license, you are not required to file this report.
To determine if your company is or is not required to file a report, please consult with an industry knowledgeable attorney. If you need a list of potential attorneys in this field, please email info@debanked.com.
The CFPB is Now Investigating the CFPB
February 13, 2025The new CFPB, one in which the office is closed and its workers can’t work, has now refocused its attention to investigating itself. A new tip line has been set up for people being pursued by CFPB enforcement or supervision staff to report them as being in violation of a stand down order. That’s because Acting Director Russell Vought has ordered its employees not to work while an audit conducted by the Department of Government Efficiency takes place. This tip line is designed to root out employees ignoring the order.
Vought confirmed the tip line on Thursday.
Trump: We got rid of the CFPB
February 10, 2025
The one week closure of the CFPB may last longer than previously suggested. The President on Monday talked about the CFPB’s existence in the past tense. While speaking rather candidly on his feelings about Senator Warren, he said of the recent orders freezing the CFPB’s operations: “We did the right thing. [The CFPB] was a very important thing to get rid of.”
When a reporter requesting clarification asked him: “Your goal is to get it totally eliminated?” Trump responded by saying “Yeah because we’re trying to get rid of waste, fraud, and abuse.”
Just days earlier Acting Director Russell Vought ordered the agency’s offices be closed for a week and that all employees refrain from work of any kind.
Small business lenders and MCA funders were scheduled to begin collecting data in accordance with the CFPB’s 888-page rule book starting this July.
CFPB HQ Temporarily Closed, Operations Frozen
February 10, 2025The CFPB’s headquarters in Washington DC will be closed this week as the agency undergoes an audit from the Department of Government Efficiency. The audit coincides with the arrival of yet another new Acting Director, Russell Vought, who is also serving officially as the Director of OMB. At the CFPB this weekend, Vought told employees not to “approve or issue any proposed or final rules or formal or informal guidance” and to “suspend the effective dates of all final rules that have been issued or published but that have not yet become effective.” He also told the Federal Reserve that the agency does not need funding at this time due to having too much on hand already.
Pursuant to the Consumer Financial Protection Act, I have notified the Federal Reserve that CFPB will not be taking its next draw of unappropriated funding because it is not "reasonably necessary" to carry out its duties. The Bureau's current balance of $711.6 million is in fact…
— Russ Vought (@russvought) February 9, 2025
While he has ordered all final rules that have been issued or published but not yet effective be suspended, some legal observers have indicated that the small business data collection process overseen by the CFPB (pursuant to Section 1071 of Dodd-Frank) that is scheduled to start on July 18 is technically bound by rules already in effect and that the deadline is merely the start date for compliance. However, that interpretation may be at odds with the spirit and intent of the suspension.
The Independent Community Bankers Association (ICBA) welcomed Vought into the role. “We look forward to working closely with Director Vought, the Trump administration, and the 119th Congress to implement needed CFPB regulatory reforms to help community banks meet the needs of local communities,” they said. The statement included a link in which they call for the small business lending data collection rules to be repealed.
“Intrusive data collection will compromise the privacy of small business applicants, effectively ‘commoditize’ small business lending, and increase the cost of credit,” they say. “ICBA urges the 119th Congress to promptly repeal or substantially revise Section 1071 to limit the implementation of a destructive rule.”
CFPB Union Deletes its Bizarre Press Release as DOGE Audit Commences
February 7, 2025Update 2 (Feb 8): The CFPB has effectively been closed by its new Acting Director.
Update 1: Segments of the CFPB’s main website and X account have now been taken offline as well.
If you’ve ever wondered what might be in store when facing the CFPB, a now deleted press release issued by its union leadership on Friday revealed a whole new side of the financial regulator.
The announcement, titled CFPB Union NTEU 335 spies dodgy DOGE bros, launched insults against three younger members of the DOGE team conducting an agency audit as well as Elon Musk. In addition to calling Musk a “confidant” of the late Jeffrey Epstein, it made fun of the DOGE auditors backgrounds’, personal interests, and even in one case an auditor’s father.
“Kliger’s daddy works at Experian which is the same company CFPB sued in January for covering up errors on credit reports with sham investigations,” it said. “While alleged coder Kliger made between zero to three git commits in the last year, workers at the CFPB returned $1.3 billion to scammed Americans in that time.”
The press release was applauded by federal employees on Reddit who especially liked the line of it that said “CFPB Union members welcome our newest colleagues and look forward to the smell of Axe Body Spray in our elevators.”
So many people were accessing the union’s statement on their website on Friday afternoon that the site kept going offline. The press release was deleted by the evening. Around the same time Musk took to X to hint at what might happen during the audit.
CFPB RIP 🪦
— Elon Musk (@elonmusk) February 7, 2025
Among government labor unions, the CFPB’s already stood apart. It was in the news last year for staging a protest against the agency’s Director, Rohit Chopra, over allegations of pay discrimination. Although that situation resulted in a resolution, Chopra was removed from the agency only just a week ago. Since Congress has yet to confirm a new Director of the CFPB, Treasury Secretary Scott Bessent has been serving as its Acting Director. Bessent has ordered operations of the CFPB to be frozen in the interim.
Update: Shortly after this story went live, the CFPB’s account on X was deleted and components of the CFPB’s main website were taken offline. Additionally, Russell Vought was made new Acting Director of the CFPB.
The full deleted CFPB Union press release can be viewed below:
Acting Director of CFPB Orders Suspension of New Rule Effective Dates
February 3, 2025Lenders with the highest volume of small business loans, MCAs, and other products were supposed to begin collecting data by July 18, 2025, according to the original rules set forth by the CFPB. But now that might come with yet another delay. That’s because the agency’s Director was removed this past weekend and the new recently confirmed Treasury Secretary, Scott Bessent, is standing in as Acting Director for the CFPB in a temporary dual role until a permanent Director can be confirmed.
As part of that responsibility, multiple news outlets have reported that Bessent’s first order of business at the CFPB was to freeze much of the CFPB’s operations which included suspending the effective dates of rules that haven’t gone into effect yet. It remains to be determined how that might precisely impact the small business lending data collection rules.
This freeze possibility was first raised on deBanked on January 23 in the wake of Trump’s regulation freeze executive order.
CFPB Director Rohit Chopra Is Out
February 1, 2025
The CFPB director that wanted to “wipe out” all merchant cash advance companies has resigned his post (or been fired per the AP), according to a letter he shared on social media. Rohit Chopra had served in that position for four years.
While the CFPB is supposed to be a consumer-focused agency, it had gained the authority to collect data from the small business finance industry. Its 888 pages of complex rules are supposed to go into effect this year, for example, unless Trump’s January 20 executive order leads to a delay or repeal.
“This letter confirms that my term as CFPB Director has concluded,” Chopra’s letter states. “I know the CFPB is ready to work with you and the next confirmed Director, and we have devoted a great deal of energy to ensure continued success.”
California Passes Law Extending Debt Collection Rules
January 30, 2025The new year brings yet more distressing news from the Golden State. If you are in the commercial finance space, and you want to collect that gold in California, you will soon have to heed all the rules that, until now, only applied to consumer debt collectors.
Beginning July 1, 2025, commercial loans of $500,000 or less will be subject to the debt collection protections of the Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). What is potentially more troublesome is that the statute will apply not only to debt collectors, but creditors! That means that your in-house collection department will have to heed all the prohibitions and restrictions of the RFDCPA.
The rules are fairly straightforward and apply to debt collectors and creditors attempting to collect on their own paper. There are many, including:
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There is a plethora of other rules, but you get the picture.
There are other important issues, i.e.:
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One good thing about the expanded statute is that there is no licensing requirement for commercial debt collectors/creditors (yet!).
There is much more, but it is, as they say, beyond the scope of this article. My best advice is to have an attorney prepare a best practices guide to help you navigate this minefield. That is exactly what I am doing for my clients.
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