The U.S.Consumer Financial Protection Bureau (“CFPB”) has effectively stepped back from its role as the primary federal watchdog for the debt relief industry. Since February 2025, the Bureau has issued stop-work orders, terminated or attempted to terminate roughly 1,500 of its approximately 1,700 employees, dropped more than 20 active enforcement actions, and rescinded nearly 70 interpretive rules and policy statements.[1] The One Big Beautiful Bill Act, signed July 4, 2025, cut the CFPB’s statutory funding cap nearly in half, from 12% to 6.5% of the Federal Reserve’s 2009 operating expenses. The Bureau’s own chief legal officer stated that it would “shift resources away from enforcement and supervision that can be done by the States.”[2] For the debt relief industry, that shift has a direct and measurable consequence: the state-level regulator that has been quietly building enforcement capacity for four years is now the most active oversight presence in this space.
That regulator is California’s Department of Financial Protection and Innovation (“DFPI”), operating under the California Consumer Financial Protection Law, Cal. Fin. Code §§ 90000 through 90019 (“CCFPL”). The enforcement data reflects a consistent upward trajectory.[3] In 2022, the DFPI opened 196 CCFPL-related investigations and issued 94 public enforcement actions. By 2023, those figures had climbed to 734 investigations and 181 public actions, a near-fourfold increase in investigations in a single year. In 2024, the DFPI opened 699 investigations and issued 202 public actions, a 12% increase over the prior year, collecting $2.7 million in CCFPL penalties. Consumer complaints filed with the DFPI rose 6% in 2024, with debt collection accounting for 31% of all CCFPL-related complaints received.
The DFPI’s 2024 annual report was unambiguous about the intent behind those numbers. The department stated that it “has continued to expand its consumer protection efforts, particularly to fill the void as the federal government has scaled back enforcement actions and adjusts its supervisory priorities,” and identified debt relief services as a continuing enforcement priority alongside bank partnerships, unlicensed lending, and debt collection.[4]
For the debt settlement industry, two recent developments translate that trajectory into concrete compliance obligations. First, as of February 15, 2025, debt settlement companies serving California residents are required to register with the DFPI under the CCFPL for the first time.[5] The DFPI has already issued desist and refrain orders against unregistered operators, including orders rescinding all debt relief agreements with California residents and directing full consumer refunds. The March 15, 2026 first-ever annual report deadline under the registration regime has just passed, leaving companies that missed it or filed incorrectly exposed to penalties, suspension, or examination. Second, California’s SB 825, effective January 1, 2026, eliminated the enforcement exemption that previously allowed many DFPI-licensed entities to argue they were outside the CCFPL’s prohibition on unfair, deceptive, or abusive acts or practices when acting under a separate state license.[6] Debt relief providers can no longer rely on that carve-out. The DFPI’s UDAAP authority under Cal. Fin. Code § 90003 now applies to a broader set of operators than at any prior point.
In December 2025, DFPI Commissioner KC Mohseni told the California Lawyers Association that 2026 would be a “significant year” for the department.[7] For debt settlement companies operating in or serving California, the practical message is straightforward. The federal enforcement vacuum has not reduced oversight. It has redirected it. California has expanded its authority, accelerated its enforcement activity, and stated explicitly that filling the federal gap is part of its mandate. The oversight environment has not softened. It has moved.
[1]One Big Beautiful Bill Act, P.L. 119-21 (July 4, 2025); GAO, Consumer Financial Protection Bureau: Status of Reorganization Efforts, GAO-26-108448 (January 2026).
[2]CFPB Chief Legal Officer Mark Paoletta, internal memorandum to CFPB staff (April 2025), reported by Federal News Network and CBS News.
[3]California DFPI, Annual Report of Activity Under the California Consumer Financial Protection Law for 2024 (May 2025); Annual Report for 2023 (April 2024).
[4]DFPI 2024 Annual Report, at 1.
[5]Cal. Code Regs. tit. 10, § 1041(a); DFPI CCFPL Registration Requirements, effective February 15, 2025.
[6]SB 825, Cal. Stats. 2025, ch. [enacted], effective January 1, 2026, amending Cal. Fin. Code § 90002.
[7]Commissioner KC Mohseni, remarks to the California Lawyers Association Consumer Financial Services Committee (December 17, 2025), reported by California Lawyers Association.