Chapter 5Enforcement

Section § 28154

Explanation

If a license holder doesn't submit required reports or include necessary information in them on time, they can be fined up to $100 for each day the report is late. The commissioner sets deadlines for these reports, with potential extensions.

Additionally, the commissioner has the power to immediately suspend or revoke a license if these reporting obligations are not met.

(a)CA Financial Code § 28154(a) If a licensee fails to do either of the following, the commissioner shall impose a penalty in a sum of up to one hundred dollars ($100) for every day late:
(1)CA Financial Code § 28154(a)(1) To make any report required by law or by the commissioner within 10 days from the day designated for the making of the report, or within any extension of time granted by the commissioner.
(2)CA Financial Code § 28154(a)(2) To include therein any matter required by law or by the commissioner.
(b)CA Financial Code § 28154(b) The commissioner may by order summarily suspend or revoke the license if a licensee fails to file any report required by this division.
reporting deadline penalty for late reporting commissioner authority license suspension license revocation report compliance daily fines required reports failure to report financial penalties licensee obligations extension of time summary action
(Amended by Stats. 2018, Ch. 379, Sec. 21. (AB 38) Effective January 1, 2019.)

Section § 28156

Explanation

This law gives the commissioner authority to censure, suspend, or ban a person from working with licensees if they violate rules, cause harm, or commit relevant crimes. A person can be temporarily barred for up to 12 months if it's in the public interest and they knew, or should have known, they were breaking the law. If someone is convicted of certain crimes or judged liable in court, they can also face penalties.

If the commissioner intends to issue an order, the person involved can request a hearing within 15 days to contest it. If they don't request a hearing, they lose that right. Once notified of a pending order, the person must stop servicing immediately.

Suspended or banned individuals cannot participate in or be present at business activities involving a licensee. This law applies regardless of when the previous violations or convictions occurred.

(a)CA Financial Code § 28156(a) The commissioner may, after appropriate notice and opportunity for hearing, by order, censure or suspend for a period not exceeding 12 months, or bar from any position of employment, management, or control of any licensee, or any other person, if the commissioner finds either of the following:
(1)CA Financial Code § 28156(a)(1) That the censure, suspension, or bar is in the public interest and that the person has committed or caused a violation of this division or rule or order of the commissioner, which violation was either known or should have been known by the person committing or causing it or has caused material damage to the licensee or to the public.
(2)CA Financial Code § 28156(a)(2) That the person has been convicted of or pleaded nolo contendere to any crime, or has been held liable in any civil action by final judgment, or any administrative judgment by any public agency, if that crime or civil or administrative judgment involved any offense specified in subdivision (b) of Section 50317, or any other offense reasonably related to the qualifications, functions, or duties of a person engaged in the business in accordance with the provisions of this division.
(b)CA Financial Code § 28156(b) Within 15 days from the date of a notice of intention to issue an order pursuant to subdivision (a), the person may request a hearing under the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Division 3 of Title 2 of the Government Code). Upon receipt of a request, the matter shall be set for hearing to commence within 30 days after such receipt unless the person subject to this division consents to a later date. If no hearing is requested within 15 days after the mailing or service of such notice and none is ordered by the commissioner, the failure to request a hearing shall constitute a waiver of the right to a hearing.
(c)CA Financial Code § 28156(c) Upon receipt of a notice of intention to issue an order pursuant to this section, the person who is the subject of the proposed order is immediately prohibited from engaging in any servicing.
(d)CA Financial Code § 28156(d) Persons suspended or barred under this section are prohibited from participating in any business activity of a licensee and from engaging in any business activity on the premises where a licensee is servicing.
(e)CA Financial Code § 28156(e) This section shall apply to any violation, conviction, plea, or judgment occurring at any time prior to and after the enactment of this section.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28158

Explanation

This section explains that if the commissioner, after looking into it, thinks a business with a license is doing something harmful or dangerous, they can order that business to stop these unsafe actions. This order goes into effect right away but becomes final only if certain rules are followed.

If, after investigation, the commissioner has reasonable grounds to believe that a licensee is conducting or has conducted business in an unsafe or injurious manner, the commissioner shall, by written order addressed to the licensee, direct the discontinuance of the unsafe or injurious practices. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 28164.
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(Amended by Stats. 2022, Ch. 188, Sec. 16. (AB 2433) Effective January 1, 2023.)

Section § 28160

Explanation

If the commissioner thinks someone is servicing student loans in California without a license, they can tell that person to stop. If the person wants to challenge the order, they have 30 days to ask for a hearing. If a hearing is not held within 60 days of requesting it, the order is canceled. This rule doesn't apply to those who are exempted by another specific section.

Whenever, in the opinion of the commissioner, a person is engaged in the business of servicing student loans in this state, either actually or through subterfuge, without a license from the commissioner, the commissioner may order that person to desist and refrain. If, within 30 days after an order is served, a request for a hearing is filed in writing and the hearing is not held within 60 days of the filing, the order is rescinded. This section does not apply to persons exempted under subdivision (b) of Section 28102.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28162

Explanation

If the commissioner, after investigating, believes a license holder isn't following the rules, they can issue a written order requiring the licensee to stop breaking the rules immediately. This order takes effect right away but can only become permanent following the rules in another specific section.

If, after investigation, the commissioner has reasonable grounds to believe that a licensee is failing to comply with this division or any regulation or order of the commissioner, the commissioner shall, by written order addressed to the licensee, direct the discontinuance of the failure to comply. The order shall be effective immediately, but shall not become final except in accordance with the provisions of Section 28164.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28164

Explanation

This section outlines the process for finalizing an order against a licensee. Before an order can become final, the licensee must be notified and given a chance to request a hearing within 15 business days. If no hearing is requested within 30 days, the order can become final without one. If a hearing occurs and the licensee is found to be operating unsafely or violating regulations, the order will be finalized, and the licensee must stop the specified practices.

If the order is made final, the licensee has 10 days to ask the court to stop the order's enforcement. If the court doesn't act in those 10 days, the licensee must follow the order. The commissioner can revoke the license if the licensee doesn't comply, but this revocation can be halted if the licensee obtains a court order within 10 days of the revocation.

(a)CA Financial Code § 28164(a) No order issued pursuant to this chapter may become final except after notice to the affected licensee of the commissioner’s intention to make the order final and of the reasons for the finding. The commissioner shall also notify the licensee that upon receiving a request, the matter will be set for hearing to commence within 15 business days after receipt. The licensee may consent to have the hearing commence at a later date. If no hearing is requested within 30 days after the mailing or service of the required notice, and none is ordered by the commissioner, the order may become final without hearing and the licensee shall immediately discontinue the practices named in the order. If a hearing is requested or ordered, it shall be held in accordance with the provisions of the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all of the powers granted under that act. If, upon the hearing, it appears to the commissioner that the licensee is conducting business in an unsafe and injurious manner or is failing or has failed to comply with this division or any regulation or order of the commissioner, the commissioner shall make the order of discontinuance final and the licensee shall immediately discontinue the practices named in the order.
(b)CA Financial Code § 28164(b) The licensee has 10 days after an order is made final to commence an action to restrain enforcement of the order. If the enforcement of the order is not enjoined within 10 days by the court in which the action is brought, the licensee shall comply with the order.
(c)CA Financial Code § 28164(c) The commissioner may immediately revoke the licensee’s license if the licensee fails to comply with any order issued under this division. The commissioner shall not revoke the license if, within 10 days from the effective date of the revocation order, the licensee secures a court order restraining the enforcement of the commissioner’s revocation order.
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(Amended by Stats. 2022, Ch. 188, Sec. 17. (AB 2433) Effective January 1, 2023.)

Section § 28166

Explanation

The commissioner can suspend or revoke a license if certain conditions are met after a notice and hearing. This includes if the licensee breaks rules, doesn't cooperate with investigations, commits fraud, or shows gross negligence with student loans. Other reasons include if the person in charge isn't fit for the role, engages in dangerous practices, becomes insolvent, or if any other disqualifying condition that would have initially prevented them from getting the license is found to exist.

The commissioner may issue an order suspending or revoking a license if, after notice and an opportunity for hearing, the commissioner finds any of the following:
(a)CA Financial Code § 28166(a) The licensee is violating this division or a regulation adopted or an order issued under this division.
(b)CA Financial Code § 28166(b) The licensee does not cooperate with an examination or investigation by the commissioner.
(c)CA Financial Code § 28166(c) The licensee engages in fraud, intentional misrepresentation, or gross negligence in servicing a student loan.
(d)CA Financial Code § 28166(d) The competence, experience, character, or general fitness of the licensee, an individual specified in Section 28116, or any person responsible for servicing a student loan for the licensee indicates that it is not in the public interest to permit the licensee to continue servicing student loans.
(e)CA Financial Code § 28166(e) The licensee engages in unsafe or injurious practice.
(f)CA Financial Code § 28166(f) The licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors.
(g)CA Financial Code § 28166(g) Any fact or condition exists that, if it had existed at the time the licensee applied for the license, would have been grounds for denying the application.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28168

Explanation

This law empowers the commissioner to take legal action if they suspect someone is or will violate certain financial rules. The commissioner can file a lawsuit to stop such actions or ensure compliance, potentially leading to the appointment of a fiduciary to manage the accused’s assets. This fiduciary can also act on behalf of company officers and even file for bankruptcy if needed.

Additionally, the commissioner can seek extra remedies in court, like requiring violators to pay back money or compensate those harmed by their actions. The courts can grant such broader actions as deemed necessary.

(a)CA Financial Code § 28168(a) If, after investigation, the commissioner has reasonable grounds to believe that a person has engaged or is about to engage in any act or practice constituting a violation of any provision of this division or any rule or order hereunder, the commissioner may bring an action to enjoin the acts or practices or to enforce compliance with this division or any rule or order adopted under this division. The action shall be brought in the name of the people of the State of California in the superior court. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted. A receiver, monitor, conservator, or other designated fiduciary or officer of the court, which may include the commissioner, may be appointed for the defendant or the defendant’s assets. Any other ancillary relief may be granted as appropriate.
A receiver, monitor, conservator, or other designated fiduciary or officer of the court appointed by the superior court pursuant to this section may, with the approval of the court, exercise any or all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties. The powers include the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court, by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the superior court.
(b)CA Financial Code § 28168(b) If the commissioner determines it is in the public interest, the commissioner may include in any action authorized by subdivision (a) a claim for ancillary relief. The ancillary relief may include, but not be limited to, restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action. The court shall have jurisdiction to award additional relief.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28170

Explanation

This law says that if the department finds someone servicing student loans without a license or breaking rules, they can issue a written citation. The citation can demand the person stop what they're doing and include a fine of up to $2,500. Collected fines go to the State Corporations Fund.

These penalties are additional to other legal consequences.

If the person doesn't inform the department within 30 days that they want a hearing, the citation is final. Hearings follow specific government code procedures.

If a person doesn't comply after all review processes, the department can ask the court for a judgment to enforce the penalty and compliance.

(a)CA Financial Code § 28170(a) If, upon inspection, examination or investigation, based upon a complaint or otherwise, the department has cause to believe that a person is engaged in the business of servicing student loans without a license, or a licensee or person is violating any provision of this division or any rule or order thereunder, the department may issue a citation to that person in writing, describing with particularity the basis of the citation. Each citation may contain an order to desist and refrain and an assessment of an administrative penalty not to exceed two thousand five hundred dollars ($2,500). All penalties collected under this section shall be deposited in the State Corporations Fund.
(b)CA Financial Code § 28170(b) The sanctions authorized under this section shall be separate from, and in addition to, all other administrative, civil, or criminal remedies.
(c)CA Financial Code § 28170(c) If within 30 days from the receipt of the citation the person cited fails to notify the department that the person intends to request a hearing as described in subdivision (d), the citation shall be deemed final.
(d)CA Financial Code § 28170(d) Any hearing under this section shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and in all states the commissioner has all the powers granted therein.
(e)CA Financial Code § 28170(e) After the exhaustion of the review procedures provided for in this section, the department may apply to the appropriate superior court for a judgment in the amount of the administrative penalty and order compelling the cited person to comply with the order of the department. The application, which shall include a certified copy of the final order of the department, shall constitute a sufficient showing to warrant the issuance of the judgment and order.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28172

Explanation

If a person breaks any part of this law or related rules, they could face a fine of up to $2,500 for each violation. This fine is collected through a lawsuit filed by the commissioner representing the people of California in court.

The penalties in this section are not the only option. Other legal remedies can also be used together with these penalties to enforce this law.

(a)CA Financial Code § 28172(a) Any person who violates a provision of this division, or any rule or order under this division, shall be liable for a civil penalty not to exceed two thousand five hundred dollars ($2,500) for each violation. This penalty shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the commissioner in any court of competent jurisdiction.
(b)CA Financial Code § 28172(b) As applied to the penalties for acts in violation of this division, the remedies provided by this section and by other sections of this division are not exclusive, and may be sought and employed in any combination to enforce the provisions of this division.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28174

Explanation

If someone breaks the rules in this division, the commissioner can share the evidence with the local district attorney, who can start criminal charges even without the commissioner's referral. The commissioner's team can help the district attorney during the trial. If it's beneficial to the public, the commissioner can send records of investigations or hearings to the relevant prosecuting official.

(a)CA Financial Code § 28174(a) The commissioner may refer the evidence that is available concerning any violation of this division or of any rule or order adopted under this division to the district attorney of the county in which the violation occurred. The district attorney may, with or without the commissioner’s referral, institute criminal proceedings under this division. The commissioner and his or her counsel, deputies, or assistants may, upon request of the district attorney, assist the district attorney in presenting the law or facts at the trial.
(b)CA Financial Code § 28174(b) After an examination, investigation, or hearing under this division, if the commissioner deems it of public interest or advantage, he or she may certify a record to the proper prosecuting official of the county or city in which the act complained of, examined, or investigated occurred.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)

Section § 28176

Explanation

This law states that any hearings required under this division must follow specific procedures outlined in another section of the Government Code. It also mentions that the commissioner responsible for these hearings has all the authority granted by that other section.

All hearings provided for in this division shall be conducted in accordance with the provisions of Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The commissioner has all the powers granted therein.
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(Added by Stats. 2016, Ch. 824, Sec. 2. (AB 2251) Effective January 1, 2017. Operative July 1, 2018, pursuant to Section 28182.)