DFPI Announces Enforcement Actions Against Student Loan Debt Relief Companies, Secures Consumer Refunds and Penalties

The California Department of Financial Protection and Innovation (DFPI) announced enforcement actions against three companies to prevent them from unlawfully charging fees for student loan debt relief services to California consumers before any actual work has been performed. The companies are Financial Enhancement Services, Inc., The Firm Alternative LLC dba DocuPrep Xpress, and Total Rain Inc. dba Student Aid Group.

Each company was ordered to desist and refrain from engaging in unlawful student loan debt relief practices and soliciting and collecting advance fees prior to providing student loan debt relief services. In addition, the companies were directed to rescind all outstanding contracts with California consumers, issue refunds, and pay total penalties of $260,000. To date, the DFPI has also secured $85,000 in customer refunds through its agreement with The Firm Alternative LLC dba DocuPrep Xpress.

On Sept. 29, Governor Gavin Newsom signed AB 1934, which delays the operative licensing date of the Digital Financial Assets Law (DFAL) by one year, from July 1, 2025, to July 1, 2026. The DFAL prohibits an entity from engaging in digital financial asset business activity unless the entity holds a license from the DFPI by this July 1, 2026, deadline.

AB 1934 included additional requirements for licensees, such as maintaining customer financial records and compliance records. The bill also requires a licensee to maintain a monthly report that shows a stablecoin issuer has complied with stablecoin reserve requirements under DFAL.

The DFPI is now inviting public comments related to the DFAL license application, application fees, and other topics by November 18, 2024. Learn more about DFAL or submit a comment at dfpi.ca.gov/dfal.

As a part of its ongoing effort to modernize technology infrastructure, the DFPI plans to launch a new Franchise and Securities Electronic Submission (FRANSES) system in February 2025.  Some improvements franchise and securities filers will experience include:

• Increased visibility into filing, including enhanced communications, and status updates.
• Consolidated log-in structure so that account users may manage several organizations with a single account rather than separate accounts for each organization.
• User account management whereby an authorized representative may assign delegated users certain access rights when filing applications and notices.
• Online filing capability for most section codes, reducing the need for uploading .pdf versions of the section code forms.
• Enhanced reporting and statistics.

To receive upcoming communications about FRANSES, subscribe on the DFPI website. On the subscription page, select For Industry, then FRANSES under the Information, Resources, & Online Tools heading.

For specific questions, please contact SRD_Support@dfpi.ca.gov.

On February 9, 2024, the Commissioner published a Notice of Proposed Rulemaking under the Debt Collection Licensing Act. The proposed rulemaking defines “net proceeds” for the purpose of determining a licensee’s annual assessment and sets forth information to be included in a licensee’s annual report. In response to comments, the Commissioner sought comments on proposed first modifications on June 17, 2024.

In response to comments received on the proposed first modifications, the Commissioner issued a Notice of Second Modifications and proposed Second Modified Text on Sept. 11, 2024. The deadline to submit comments on the second modified rules ended on Sept. 27, 2024, and the Commissioner is currently evaluating the comments.

Each month we educate consumers through community events and a monthly consumer financial education webinar.

Healing Financial Stress and Trauma

Nov 6, 12 – 1 p.m. | Virtual 

Financial difficulties can have a significant impact on your emotional and mental well-being. Learn to manage how to manage financial stress, recover from trauma, and start emotional healing. Gain the confidence and resilience to cultivate a healthier relationship with money and rebuild your financial future. Guest speaker: Samuel Molina, CEO of the Academy of Financial Education. Register online.

Senior Scam Stopper with Asm. Tri Ta (AD 70)

Oct. 25, 2:30 – 4:30 p.m. | Westminster

Senior Scam Prevention Seminar with Asm. Diane Dixon (AD 72)

Oct. 28, 9 – 11 a.m. | Laguna Hills

Student Loan Debt webinar

Oct. 29, | 11 a.m. – 12 p.m. | Virtual