PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Sezzle Gets Back Into Action With California Regulator’s Approval

By Brian Riley
January 17, 2020
in Analysts Coverage, Compliance and Regulation, Digital Assets & Crypto, Emerging Payments, Fintech
0
4
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Sezzle Gets Back Into Action With California Regulator’s Approval

Last week, we reported that Sezzle’s ability to lend in California was over as the California Department of Business Oversight rejected their lending license application.  The decision has since been reversed, as Reuters indicated this morning:

The California Department of Business Oversight (DBO) initially rejected Sezzle’s license application last month after calling out the firm for making “illegal unlicensed lending” in the state. It said on Thursday that Sezzle would have to refund $282,000 to Californian consumers and pay a $28,200 penalty.

Sezzle Inc said on Friday that a Californian regulator had approved its application for a lending license, sending its shares sharply higher, although the approval came with a fine and a rap on the knuckles over previously charged loan fees.

The license now allows Sezzle to structure its credit offerings directly to consumers, removing merchants from the process.

Shares in the company soared 26% to A$2.23 in Australia on Friday, their highest level since mid-December.

The state-capital based Sacramento Business Journal summarized the events:

Sezzle began offering its service in California without a lending license. The DBO determined Sezzle was making unregulated loans to California consumers in violation of the California Financing Law, the DBO said in its opinion in December.

Even though the consumer doesn’t pay interest if they follow the payment plan, they are still getting a money advance, and under California law, that is a loan, according to the DBO’s opinion.

“This happens all the time. A new service comes along, and they say ‘this changes everything,’ but it doesn’t,” department spokesman Mark Leyes said. “If you buy something over time, that is a loan.”

What is more interesting in this issue is how the state of California is broadening its reach into consumer finance, claiming to fill a void from the CFPB.

As part of his new budget proposal, Gov. Gavin Newsom is calling for the state’s financial regulator to expand its reach and to enforce the regulations of the federal Consumer Financial Protection Bureau. Under the proposal, the state’s Department of Business Oversight would be renamed the Department of Financial Protection and Innovation and would get a larger budget and more staff, possibly in Sacramento, to enforce the tenets of the CFPB.

The restructuring is meant to allow the state to enforce financial protections that have been rolled back by the Trump administration. The new department’s budget would get an additional $10.2 million this year for 44 new positions, growing to $19.3 million in the 2022-23 fiscal year, representing 90 positions. The department currently has just under 700 employees.

But for Sezzle, they are back into the market to face off with lenders such as Walmart’s preferred vendor in the space, Affirm.  Plenty of competition is brewing, as we covered in our recent viewpoint. “Credit Card Lenders: Hone Strategies and Do Not Let Fintechs Scare You.”  Fintech may be exciting, but lenders still need compliance guardrails to stay out of trouble.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

4
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: CaliforniaCompliance and RegulationLendingSezzle

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025
    agentic commerce

    The Agentic Advent: How the Next Iteration of AI is Shaping Commerce

    June 6, 2025
    payments hub, digital banking

    All in One: How a Payments Hub Eliminates the Pain Points

    June 5, 2025
    Vertical SaaS

    From Underdogs to Industry Leaders: How Vertical SaaS Powers Mid-Sized Firms

    June 4, 2025
    credit card surcharging

    A Perfectly Understandable Bad Idea: Why Merchants Should Reconsider Surcharging

    June 3, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result