Attorney General Bonta Supports New Rule Creating Registry for Repeat Consumer Protection Law Offenders

Helps promote financial marketplaces that are safe, transparent, and reliable 

OAKLAND — California Attorney General Rob Bonta this week, along with a coalition of attorneys general, sent a letter to the Consumer Financial Protection Bureau (CFPB) supporting a final rule to detect and deter corporate offenders that have broken consumer laws and are subject to federal, state, or local government or court orders. Under the rule nonbank entities that offer consumer financial products must inform the CFPB if they become subject to an order issued by a federal, state, or local regulator or a court related to violations of consumer protection laws. The CFPB will then make this information available to regulators, businesses, and the public through a searchable online registry.

“It’s an age-old adage, but it’s true. Knowledge is power. We cannot efficiently fight injustice — or stand up for those who are taken advantage of or harmed — when we do not have access to current information,” said Attorney General Bonta. “As technology and innovation grow, we must keep up with it. Creating a transparent and accessible registry where agencies and consumers alike can vet nonbank financial services companies is a step to holding those who break the law accountable. I thank the CFPB for this timely rule and look forward to having another tool in the toolbox to help protect the financial health of Californians.”

When a financial services company violates consumer protection laws, a government law enforcement or regulatory agency may take enforcement action against them. While this usually leads to the issuance of a public order by the court or the agency itself, there is not currently a common database that tracks all of these orders. The registry will help the CFPB and other law enforcement and regulatory agencies identify repeat offenders and recidivism trends. The registry will also assist investors, creditors, business partners, and members of the public conducting due diligence or research on financial firms bound by law enforcement orders. 

In the letter, the attorneys general applaud the rule and the access it gives consumers, government agencies, and market participants to identify companies that have engaged in deceptive or abusive conduct. The registry enhances the CFPB’s ability to deploy resources more efficiently and prioritize enforcement actions against repeat offenders or entities subject to orders. State attorneys general benefit from enhanced abilities to spot emerging problems and engage in early prevention efforts. By creating a registry, market participants will have a single place to identify instances of specific conduct that courts or agencies have previously determined to be unlawful, deceptive, unfair, or abusive, and to shape their own marketing and compliance efforts accordingly.

Attorney General Bonta is committed to ensuring Californian's financial marketplaces are safe and equitable. In February, Attorney General Bonta issued letters to banks and credit unions not subject to the Consumer Financial Protection Bureau’s supervision warning that overdraft and returned deposited item fees may violate California and federal laws. Some financial institutions charge up to $36 or more for each overdraft. California consumers paid an estimated $200 million in overdraft fees in 2022, with the financial burden disproportionately falling on low-income consumers and consumers of color. In January, Attorney General Bonta submitted a comment letter supporting a proposed rule that would expand the CFPB’s supervisory authority to cover non-traditional payment digital applications which are not subject to the same federal regulatory oversight as their traditional bank counterparts. This lack of federal oversight exposes millions of digital payment platform users to risks that can be higher for vulnerable consumers, including young or low-income individuals, who may not have ready access to traditional FDIC-insured bank-provided digital payment platforms.

In submitting the letter, Attorney General Bonta joins the attorneys general of New York, Colorado, Connecticut, Illinois, Maryland, Minnesota, Oregon, Pennsylvania, and Vermont.

A copy of the letter can be found here.