The California Department of Financial Protection and Innovation (DFPI) has released draft regulations to implement the provisions of the California Consumer Financial Protection Act (CCFPL) regarding consumer complaints and demands. Comments are due by July 5, 2022
Specifically, the CCFPL requires the DFPI to promulgate rules establishing reasonable procedures for responding to consumer complaints and inquiries about a “covered person” and rules requiring covered persons to provide responses to the DFPI regarding complaints or consumer inquiries which include certain information such as what action has been taken to respond to the complaint or request, and what responses have been received by the covered person from the consumer.
CCFPL defines “covered person” as meaning “to the extent not prohibited by federal law, any of the following: (1) any person who agrees to offer or provide a financial product or service of consumption to a resident of that state, (2) any affiliate of a person described in this subsection if the affiliate is acting as a personal service provider, or (3) any service provider to the extent where the person engages in the offer or provision of their own financial product or service to consumers. “Apart from entities exempt from the CCFPL such as deposit taking 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 such as defined by the Fair Credit Reporting Act or to student loan servicers as defined by California Civil Code Section 1788.100.
Highlights of the proposal include:
Filing complaint. Among other things, covered persons must:
- Prepare a complaint form for its consumers to use to submit written complaints, which must be available in electronic format on the covered person’s website and in hard copy upon request. The complaint form should include fields to enter the complainant’s identification information, the nature and details of the complaint, and allow supporting documents to be attached.
- Disclose in all written communications, except electronic text messages, to each consumer the procedures for making oral and written complaints to the Covered Person. This communication must also inform consumers that they can lodge a complaint with the DFPI at any time.
- Post a link to the complaint form prominently on their website and provide instructions on how complainants can submit their oral and written complaints, including contact details.
- Maintain a phone number for filing complaints with a live representative.
- Do not impose a time limit for filing a complaint of less than four years.
- A covered person who negotiates a contract with a consumer primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean must make the complaint process available in English and in the language used for contract negotiation.
Written acknowledgment required. The complainant should be provided with a written acknowledgment of receipt of the complaint, including the date of receipt, a unique tracking number to identify the complaint, and contact information for the person designated to handle the complaint. There are different requirements for providing a written acknowledgment for complaints by e-mail or the Internet, complaints received by postal mail and complaints by telephone.
Complaints examination procedure. When reviewing and assessing compliance, a Covered Person must:
- Have each Complaint investigated by the Covered Person’s staff responsible for the services and transactions that are the subject of the Complaint.
- Require third-party service providers to investigate every complaint and include in their contracts with such third parties clear expectations regarding third-party responsibilities, as well as appropriate and enforceable consequences for breaching those responsibilities.
- Designate an agent for the covered person who will be primarily responsible for the complaint process.
Procedure for responding to a complaint. Covered Persons should 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 receipt of the Complaint.
- The written response must 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 due date. entry into force of the corrective action. The response should also inform complainants that they may submit any unresolved complaints to their satisfaction to the DFPI.
- The Covered Person shall not take any adverse or retaliatory action against a Complainant, including contract cancellation, in retaliation for filing a Complaint.
- Once a Covered Person has provided a Written Response to a Complainant, the Covered Person may respond to subsequent duplicate Complaints from the same Complainant with written notice that there will be no response because the Complainant has already submitted the same complaint, received a response, and provided no new information in the subsequent duplicating complaint regarding the same act, omission, decision, condition or policy.
A written record must be kept. Affected persons must keep a written record of each complaint for at least five years from the date the complaint is filed.
Quarterly reports required. Affected persons must submit a quarterly complaint report to the DFPI, which is also made available to the public. These quarterly reports should contain information on all complaints received by the covered person, including complaints forwarded by the DFPI.