Governor Newsom signs consumer financial protection law to tackle predatory practices and increase transparency

AB 390 Streamlines Auto-Renewal Cancellation and Increases Advance Notice for Continuous Service Subscriptions

AB 1405 and SB 531 extend consumer rights and notification requirements related to debt settlement and collection

California has established the nation’s strongest consumer financial protection watchdog under legislation signed by the governor last year

SACRAMENTO – Governor Gavin Newsom today signed a set of consumer financial protection laws to expand consumer rights and increase transparency, protecting Californians from scams and unscrupulous practices in auto-renewing subscriptions, the debt settlement and collection and other financial services.

“These bills curb predatory and abusive practices used to target vulnerable Californians and allow consumers to make informed decisions with their hard-earned dollars,” Governor Newsom said. “With the nation’s strongest consumer financial watchdog and these new measures, California continues to have the backs of working families recovering from the pandemic.”

Governor Newsom signed a law last year creating the Department of Financial Protection and Innovation, dramatically expanding the state’s ability to protect consumers by bringing in additional investigators and lawyers to oversee institutions. financial institutions and crack down on financial predators. Modeled on the Federal Bureau for Financial Consumer Protection, the creation of the department was a key idea in the governor’s budget proposal of January 2020-2021.

The governor today signed AB 1405 by Assembly Member Buffy Wicks (D-Oakland), which protects Californians from predatory debt settlement practices, ensuring that suppliers disclose important information to consumers about the process. Under the legislation, clients who sign up for a debt settlement plan will have a three-day window to review disclosures before the contract goes into effect. SB 531 by Senator Bob Wieckowski (D-Fremont) allows consumers to request verification that debt collectors have the authority to collect a debt and prohibits a creditor from selling a consumer debt unless a notice does has been provided to the debtor at least 30 days before the sale of the debt.

AB 390 by Assembly Member Marc Berman (D-Menlo Park) strengthens protections under California’s auto-renewal law by ensuring consumers can cancel auto-renew and continuous service subscriptions online. The law also requires companies to notify consumers before the expiration of a free trial or promotional price included as part of a subscription offer. AB 1221 by Assembly Member Heath Flora (R-Ripon) clarifies that the terms of extended warranties which continue until canceled must be clearly indicated to the purchaser. AB 1320 by Assembly Member Rebecca Bauer-Kahan (D-Orinda) requires licensed companies offering money transfer services to prominently provide a toll-free live customer service phone number, ensuring that consumers can easily ask for help.

A full list of bills signed by the governor to protect consumers and expand access to financial services is below:

  • AB 390 by Assembly member Marc Berman (D-Menlo Park) – Advertising: automatic renewal and continuous service offers: online notice and termination.
  • AB 1177 by Assembly Member Miguel Santiago (D-Los Angeles) – California Public Banking Option Act.
  • AB 1221 by Assembly Member Heath Flora (R-Ripon) – Consumer guarantees: service contracts: cancellation: disclosures.
  • AB 1320 by Assembly member Rebecca Bauer-Kahan (D-Orinda) – Money transfer: customer service.
  • AB 1405 by Assembly Member Buffy Wicks (D-Oakland) – Debt Settlement Practices.
  • SB 531 by Senator Bob Wieckowski (D-Fremont) – Consumer Debt.

For the full text of the invoices, visit: http://leginfo.legislature.ca.gov

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