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Governor Newsom Signs Consumer Financial Protection Legislation to Combat Predatory Practices and Increase Transparency

AB 390 streamlines cancellation of automatic renewal and increases notice for continuous service subscriptions

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

California established nation’s strongest state consumer financial protection watchdog under legislation Governor signed last year

SACRAMENTO – Governor Gavin Newsom today signed a package of consumer financial protection legislation to expand consumer rights and increase transparency, protecting Californians from scams and unscrupulous practices in automatic renewal subscriptions, debt settlement and collection and other financial services.

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

Governor Newsom last year signed legislation establishing the Department of Financial Protection and Innovation, significantly expanding the state’s capacity to protect consumers by bringing on additional investigators and attorneys to supervise financial institutions and crack down on financial predators. Modeled on the federal Consumer Financial Protection Bureau, the department’s creation was a key idea in the Governor’s January 2020-2021 budget proposal.

The Governor today signed AB 1405 by Assemblymember Buffy Wicks (D-Oakland), which protects Californians from predatory debt settlement practices, ensuring providers disclose important information about the process to consumers. Under the legislation, customers who enroll in a debt settlement plan will have a three-day window to review the disclosures before the contract takes effect. SB 531 by Senator Bob Wieckowski (D-Fremont) allows consumers to request verification that collectors have the authority to collect a debt and prohibits a creditor from selling a consumer debt unless notice has been provided to the debtor at least 30 days before selling the debt.

AB 390 by Assemblymember Marc Berman (D-Menlo Park) strengthens protections under California’s Auto Renewal Law by ensuring that consumers can cancel automatic renewal and continuous service subscriptions online. The legislation also requires businesses to notify consumers before the expiration of a free trial or promotional price included as part of a subscription offer. AB 1221 by Assemblymember Heath Flora (R-Ripon) clarifies that the terms of extended warranties which continue until they are canceled must be made clear to the buyer. AB 1320 by Assemblymember Rebecca Bauer-Kahan (D-Orinda) requires licensed companies offering money transfer services to prominently provide a live customer service toll-free telephone number, ensuring consumers can readily seek assistance.

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

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

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

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