A bill (AB 1428) has been introduced in the California Assembly that would apply to a “business” that uses prepaid cards to make refunds to customers located in California.  The bill would require such a business to allow the customer to choose whether to get the refund by prepaid card, check, or a refund back to the original form of payment. For purposes of this requirement, a “business” is defined as “a proprietorship,…

The California Department of Business Oversight (DBO) has issued an invitation for comments from stakeholders in developing regulations to implement SB 1235, the bill signed into law on September 30, 2018 that requires consumer-like disclosures to be made for certain commercial financing products, including small business loans and merchant cash advances.  Companies providing such financing are not required to comply with the new disclosure requirements until the DBO’s final regulations become effective. The DBO’s invitation…

Ballard Spahr attorneys Chris Willis, Scott Pearson, and Taylor Steinbacher discuss recent noteworthy developments in California law. Chris, who chairs Ballard’s Consumer Financial Services Litigation Group, and Scott, a partner in the Consumer Financial Services group, discuss the recently decided California Supreme Court De La Torre case, which makes licensed lenders vulnerable to claims that high-interest rate loans over $2,500 may be unconscionable. Chris and Taylor, an associate in the Consumer Financial Services group, discuss the…

Politico has reported that in remarks made at a fintech policy event last week, Andrew Smith, the FTC’s Director of Consumer Protection, indicated that fintech companies will be a focus of the FTC’s enforcement activities. According to Politico, Mr. Smith said that FTC was particularly interested in online lending, with an emphasis on small-business lending.  Mr. Smith is also reported to have identified lead generation in the context of online lending as a key area…

It appears likely that California Governor Jerry Brown will sign a bill passed on August 31 by the state’s Senate, Senate Bill 1235, which would create consumer-style disclosure requirements for certain commercial loans and other finance products, such as merchant cash advances and factoring transactions. Notably, the new disclosure requirements would apply to sponsors of bank-model lending programs in addition to companies directly extending certain forms of commercial credit pursuant to California Finance Lender licenses. …

Resolving an ambiguity in the California Finance Lender’s Law (CFLL), the California Supreme Court unanimously held that borrowers may use the unconscionability doctrine to challenge the interest rate on consumer loans of $2,500 or more, despite the fact that the CFLL has deregulated interest rates on such loans.  Although unconscionability claims of this nature will be difficult to prosecute, the decision creates heightened risk for nonbank consumer lenders doing business in California, particularly when lending…