The governors of California and New York have both proposed to expand the authority of their respective state’s consumer financial services regulator. Both governors have framed their proposals as a response to what they describe as the CFPB’s “rollback” of its efforts to protect consumers.
California. Governor Newsom’s proposals are part of his 2020-2021 proposed budget. His proposals include the following key elements:
- Enacting a new “California Consumer Protection Law” that would change the name of the Department of Business Oversight to the “Department of Financial Protection and Innovation” (DFPI) and give the DFPI expanded authority to administer the new law, such as by “expanding the Department’s authority to pursue unlicensed financial service providers not currently subject to regulatory oversight such as debt collectors, credit reporting agencies, and financial technology (fintech) companies, among others.”
- The DFPI’s activities would include:
- Offering services to empower and educate consumers, particularly older Americans, students, military service members, and recent immigrants
- Licensing and examining new industries “that are current under-regulated”
- Protecting consumers through enforcement against unfair, deceptive, or abusive activities
- Establishing a new Financial Technology Innovation Office
The budget includes a $10.2 million Financial Protection Fund and 44 positions in 2020-21, growing to $19.3 million and 90 positions in 2022-23 to establish and administer the new law.
New York. Governor Cuomo’s proposals are part of his 2020 State of the State agenda. His proposals include the following key elements:
- Enacting legislation that would: (1) make state law consistent with federal law by giving state regulators authority to bring enforcement actions for unfair, deceptive, or abusive acts or practices related to consumer financial products or services, (2) make all consumer products and services that are subject to CFPB enforcement authority also subject to state oversight by eliminating current exemptions, (3) increase maximum penalties under the Financial Services Law from $5,000 per violation to the greater of $5,000 or two times the damages or economic gain attributed to the violation, and (4) give the Department of Financial Services (DFS) explicit authority to collect restitution and damages.
- Enacting legislation that would give the DFS authority to license and regulate debt collectors.
- Enacting legislation to target robocalls that would (1) require telecommunication providers to block robocalls or be held responsible, (2) require telephone providers to fully implement STIR/SHAKEN protocols for call authentication as soon as possible, (3) make telecom companies that fail to use best efforts to stop robocalls subject to investigation and fines of up to $100,000 per day, and (4) double current maximum fines for violations of the state’s “Do Not Call” law from $11,000 to $22,000 per call.