The California Department of Financial Protection and Innovation (DFPI) has issued proposed regulations to implement provisions of the California Consumer Financial Protection Law (CCFPL) pertaining to consumer complaints and inquiries. Comments are due by July 5, 2022
Specifically, the CCFPL requires the DFPI to issue rules establishing reasonable procedures for responding to consumer complaints against and inquiries concerning a “covered person” and rules requiring covered persons to provide responses to the DFPI regarding consumer complaints or inquiries that include certain information such as what steps were taken to respond to the complaint or inquiry, and what responses were received by the covered person from the consumer.
The CCFPL defines “covered person” to mean “to the extent not preempted by federal law, any of the following: (1) any person that engages in offering or providing a consumer financial product or service to a resident of this state, (2) any affiliate of a person described in this subdivision if the affiliate acts as a service provider to the person, or (3) any service provider to the extent that the person engages in the offering or provision of its own consumer financial product or service.” In addition to entities that are exempt from the CCFPL such as depository institutions and persons acting under the authority of various licenses, certificates, or charters issued by the DFPI, the proposed regulations would not apply to consumer reporting agencies as defined by the Fair Credit Reporting Act or to student loan servicers as defined by Section 1788.100 of the California Civil Code.
Highlights of the proposal include:
Complaint Initiation. Among other things, covered persons must:
- Prepare a complaint form for its consumers to use in submitting written complaints, which must be available in electronic format on the covered person’s website and in paper upon request. The complaint form must include fields to capture the complainant’s identifying information, the nature and details of the complaint and permit supporting documentation to be attached.
- Disclose in all written communications, except electronic text messages, to each consumer the procedures for filing both oral and written complaints with the covered person. This disclosure must also inform consumers they may submit a complaint at any time to the DFPI.
- Prominently display a link on their website to the complaint form and provide instructions on how complainants may submit their oral and written complaints, including contact information.
- Maintain a telephone number for complaint initiation with a live representative.
- Not impose a time limit for filing a complaint that is less than four years.
- Covered person who negotiates a contract with a consumer primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean must make the complaint process available in both English and the language used for contract negotiation.
Written Acknowledgment of Receipt Required. The complainant must be provided with written acknowledgement of receipt of a complaint, including the date of receipt, a unique tracking number to identify the complaint, and contact information of whoever is designated to handle the complaint. There are different requirements for providing written acknowledgement of receipt for email or Internet based complaints, complaints received by postal mail, and telephone complaints.
Complaint Review Procedure. When reviewing and evaluating a compliant, a covered person must:
- Have each complaint be reviewed by staff of the covered person who are responsible for the services and operations which are the subject of the complaint.
- Require third party service providers to investigate each complaint, and include in its contracts with such third parties clear expectations about the third parties’ responsibilities, as well as appropriate and enforceable consequences for violating these responsibilities.
- Designate an officer of the covered person to be primarily responsible for the complaint process.
Procedure for Responding to Complaint. Covered persons must respond to complaints as follows:
- The covered person must generally respond in writing with a final decision on all issues within fifteen (15) calendar days of receiving the complaint.
- The written response shall contain a clear explanation of the covered person’s decision in plain language, including the specific reasons for the final decision, a summary of the steps taken to respond to the complaint, any corrective action that will be taken, and the effective date of the corrective action. The response must also inform complainants that they may submit to the DFPI any complaints not resolved to their satisfaction.
- The covered person shall not take any adverse or retaliatory actions against a complainant, including cancellation of the contract, in retaliation for the filing of a complaint.
- Once a covered person has provided a written response to a complainant, the covered person may respond to subsequent, duplicative complaints from the same complainant with a written notice stating there will be no response because the complainant previously submitted the same complaint, received a response, and provided no new information in the subsequent, duplicative complaint regarding the same act, omission, decision, condition, or policy.
Written Record Must be Maintained. Covered persons must maintain a written record of each complaint for at least five years from the complaint’s initiation.
Quarterly Reports Required. Covered persons must submit to the DFPI a quarterly complaint report that is also made available to the public. These quarterly reports must include information regarding all complaints received by the covered person, including complaints forwarded by the DFPI.