In general, any person engaging in the business of a finance lender or finance broker is required to obtain a California Finance Lenders (CFL) license. Anyone that conducts business without a CFL license subjects themselves to citations that carry penalties of up to $2,500 for each citation. Every time an unlicensed lender makes a deal, he or she may be incurring a $2,500 fine.
If, after an examination or investigation, the Commissioner of the Department of Business Oversight (the “Commissioner”) has reason to believe that a licensee or other person has violated California law, the Commissioner may issue a written citation. The citation will describe its basis and order the offending party to correct the violations identified within some express reasonable time period.
The citation may also assess an administrative fine of up to $2,500, which is deposited into the State Corporations Fund. A citation and assessed fine will constitute punishment for a violation of the law and will be considered in lieu of any other administrative discipline.
The issuance of a citation does not prevent the Commissioner from issuing an order against the licensee to desist from engaging in certain business or activities, or an order to suspend business operations for continued or repeated violations of the law. In this case, citations authorized under the law are considered separate from, and in addition to, other administrative, civil, or criminal remedies.
Any party who is issued a citation must notify the Department within 30 days of their intent to request a hearing, otherwise, the citation is deemed final.
To conclude, if a business enterprise makes or brokers loans in California without a license, or while the license was expired, the Commissioner of the Department of Business Oversight may issue fines of up to $2,500 per citation. Several hundred deals would amount to tens of thousands of dollars in fines. Not an insignificant amount.
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