Section 22100 of the California Financial Code prohibits persons from engaging in the business of a finance lender or broker without obtaining a license from the California Commissioner of Financial Protection & Innovation.  Section 22751 provides that if any amount other than or in excess of the charges permitted by the California Financing Law ("CFL") is charged or contracted for, or received, for any reason other than the willful act of the licensee, the licensee shall forfeit all interests and charges on the loan and may collect or receive only the principal amount of the loan.

North American Financial Corporation ("NAFC") is a Nevada business entity that was licensed as a broker but not a lender under the CFL.  The DFPI in the course of its examination of NAFC's broker activities discovered that NAFC had engaged in unlicensed lending in California.  In 2020, the NAFC entered into a settlement agreement with the DFPI agreeing to the entry of a desist and refrain order and the payment of a $75,000 administrative penalty.

A  year later, a California borrower individually and on behalf of a purported class sued NAFC alleging, among other things, violations of Sections 22100 and 22751.  NAFC demurred and the trial court sustained the demurrer.  On appeal, the Fourth District Court of Appeal agreed with the trial court's reasoning, finding that the CFL does not provide clear, understandable, unmistakable terms for a private cause of action, but instead provides for enforcement of violation by the DFPI Commissioner (which is what occurred here).  Lagrisola v. North American Financial Corp., 2023 WL 7273708 (Nov. 3, 2023).  

The plaintiffs also asserted causes of action under California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200.  I will have more to say about what happened with those causes in a future post.