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ARTICLE · 05 SEPTEMBER 2023

California DFPI Finalizes Small Business UDAAP Rule

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Recently, the California Department of Financial Protection and Innovation (DFPI) approved the final rule implementing and interpreting certain sections of the California...

United StatesFinance and Banking
Moorari K. Shah
Moorari K. Shah
A.J. Dhaliwal
A.J. Dhaliwal
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Recently, the California Department of Financial Protection and Innovation (DFPI) approved the final rule implementing and interpreting certain sections of the California Consumer Financial Protection Law (CCFPL) that prohibit persons from engaging in unfair, deceptive, or abusive acts or practices (UDAAP) related to commercial financial products and services and establishes data collection and reporting requirements.

The final rule, will, among other things, (i) establish UDAAP authority for the DFPI and thereby bring protections to small businesses seeking loans, by defining and prohibiting UDAAPs in the offering or provision of commercial financing to small businesses, nonprofits, and family farms; (ii) authorize the DFPI to impose enhanced penalties for "each act or omission," including increased penalties for reckless and knowing violations; (iii) create exemptions from DFPI's UDAAP authority for banks, credit unions, federal savings and

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