Last month, we discussed the California Department of Financial Protection and Innovation’s (DFPI) newly approved regulations for direct-to-consumer earned wage access (EWA) products. These regulations, approved by the Office of Administrative Law, marked a significant shift in the regulatory landscape for EWA providers, classifying these products as loans under the California Financing Law and imposing new registration requirements. The regulations are set to become effective on February 15, 2025, however, if you are a financial service provider operating in California in one of the four industry categories listed below, you must complete an application and register with DFPI before Feb. 15, 2025 to continue operating legally in the state.

On November 21, the DFPI released additional updates, further detailing the implementation of these regulations and expanding consumer protections under the California Consumer Financial Protection Law (CCFPL). The DFPI will now require providers of debt settlement services, education financing, income-based advances (i.e., EWA products), and student debt relief services to register and submit data to the department.

Key updates include:

  • Expanded Registration Requirements: Beginning February 15, 2025, the DFPI will register and regulate debt settlement services, student debt relief services, private postsecondary education financing, and income-based advances (including EWA products).
  • Formal Supervision and Data Reporting: The new regulations require formal supervision and data reporting from these industries. The DFPI will also conduct examinations to monitor compliance with consumer financial protection laws and detect any unlawful, unfair, deceptive, or abusive acts and practices. Examinations of covered persons may begin by late 2024.

Financial service providers covered by the new regulations must follow these steps to register:

  1. Create an NMLS Account: Complete the Company Account Request Form to gain access to the Nationwide Multistate Licensing System & Registry (NMLS).
  2. Submit Application Forms: Complete and submit the required application forms through NMLS by February 15, 2025.
  3. Pay Application Fee: There is a $350 application fee, invoiced through NMLS, along with an annual renewal fee.
  4. Register for a DFPI Self-Service Portal Account: Once approved through NMLS, create a self-service portal account with the DFPI.

The DFPI’s webpage also contains FAQs.

For further information or assistance with compliance, please contact our team. We will continue to monitor developments and provide updates on this important regulatory change.