Business

New services for financially struggling Californians to come under more scrutiny by state regulators

Published

1 year ago

October 22, 2024

New services for financially struggling Californians to come under more scrutiny by state regulators

Concerned that Californians were being victimized by novel types of lenders, state lawmakers gave regulators broad power in 2021 to guard against unfair, deceptive and abusive practices in the financial services industry.

On Tuesday, the California Department of Financial Protection and Innovation announced its first new regulatory targets: earned wage access, debt settlement and student loan relief services, as well as private loans with income-based repayment plans for college or trade school students. Starting in February, these services will have to register with and provide data to the department if they want to operate in California, making it easier for regulators to identify debt traps and other troublesome practices.

According to the DFPI, providers of earned wage access in California “have generally maintained that they are not subject to any existing consumer credit laws or regulations.” The rule announced Tuesday holds that these services can either be licensed and regulated as lenders subject to the California Financing Law, which limits interest rates and other terms, or register as credit providers under the 2021 law. If they choose the latter, they’ll have to submit data every month to the state about their fees, the percentage of advances repaid, the duration of the advances and the total number of advances made.

Tuesday’s rule doesn’t set any new limits on the fees charged, the amount of credit offered or other key features of the four types of services — the 2021 law doesn’t give the department that authority. What the rule will do is gather information about how these services operate and their effect on consumers, something that could lead legislators to impose new restrictions, said Suzanne Martindale, the DFPI’s senior deputy commissioner for consumer financial protection.

“The goal is to get the data,” Martindale said. “Let’s see the trends, let’s identify the risks for consumers, and then let’s have a conversation on where to go from here. … We are simply saying, come register and give us more information about your business.”

Some consumer advocates say more limits are needed on earned wage access services (also known as paycheck advances or income-based advances), which allow employees to borrow against their next paycheck based on the hours they’ve already worked. The state’s move is necessary, they say, but not sufficient.

“We really see it as the new frontier in payday lending,” Andrew Kushner, senior policy counsel for the Center for Responsible Lending, said of the services offered for a fee through employers or directly to consumers. “The problem is just like with a payday loan. It effectively creates its own ongoing demand. … It traps borrowers in a cycle of reborrowing.”

Earned wage access companies say their services give workers more control over the timing of their pay, while also helping employers reduce turnover. “Accessing accrued wages before the pay cycle ends becomes a financial lifeline, offering flexibility and confidence in financial wellness,” one provider, Rain Technologies, says on its website.

Typically, earned wage access services impose a per-use fee, a subscription charge or, in some cases, a voluntary “tip.” Two basic types of these services are covered by the rule: one that third parties offer through employers, which automatically withhold the repayment from the borrower’s next check, and one they offer directly to consumers, where the repayment is withdrawn from the borrower’s bank account.

The vast majority of those who take out advances repay them in full, the DFPI said. But the cost can be high — according to the DFPI, the fees or tips collected by the services translated to an annual interest charge of more than 330% on average in 2021 — and the repayments may lead to more borrowing.

Kushner said the earned wage access industry depends on a relatively small number of users who take out advances repeatedly. The fees they pay for the advances eat into their paychecks, deepening their financial struggles.

Lucia Constantine, a senior researcher at the Center for Responsible Lending, said the center’s research found that one-third of the people who used wage advance apps reborrowed within two weeks at least 80% of the time they used the app. Almost 40% of the users had at least six advances in one or more months, she said, and in California, those users accounted for 85% of all advances.

The center also found that more than 30% of the Californians who use wage advance apps have taken out advances from three or more different apps in a month. State residents had significantly more overdrafts from their checking accounts in the three months after using these services than before using them, the center said.

The federal Consumer Financial Protection Bureau is stepping up oversight of earned wage access services too. In July, it proposed an interpretive rule that would require these services to disclose their costs and terms more clearly, as required by the federal Truth in Lending Act.

Disclosure is important, Kushner said, but the federal government leaves it to the states to regulate the terms and conditions that lenders offer. Advance wage access products “are loans under any definition,” he said, and states should regulate the providers the same way they regulate other lenders — with caps on the fees, interest charges and other costs imposed on borrowers.

Those providers, he conceded, “are really opposed to being treated as lenders.” A number of them pushed the DFPI to ease the registration and reporting requirements, arguing they weren’t necessary to protect California consumers.

Martindale said the state’s approach to earned wage access services is a lighter regulatory touch than treating them the same as lenders under the California Financing Law. “I think we landed in a place where no one, no stakeholder got everything they wanted,” she said.

Once the registration requirement goes into effect next year, it will offer one immediate benefit for consumers: Before signing up for one of these services, they will be able to check the DFPI website to see whether the company behind it is registered and can legally operate in California.

Regardless of whether companies are licensed or registered in the state, Martindale said, the 2021 law empowers the DFPI to bring enforcement actions against them if they offer credit in unfair, deceptive and abusive ways. So far, the agency has used that power to bring more than 300 enforcement actions against financial service companies and executives.

Business

Bay Area semiconductor testing company to lay off more than 200 workers

Published

6 hours ago

January 11, 2026

Press Room

Bay Area semiconductor testing company to lay off more than 200 workers

Semiconductor testing equipment company FormFactor is laying off more than 200 workers and closing manufacturing facilities as it seeks to cut costs after being hit by higher import taxes.

The Livermore, Calif.,-based company plans to shutter its Baldwin Park facility and cut 113 jobs there on Jan. 30, according to a layoff notice sent to the California Employment Development Department this week. Its facility in Carlsbad is scheduled to close in mid-December later this year, which will result in 107 job losses, according to an earlier notice.

Technicians, engineers, managers, assemblers and other workers are among those expected to lose their jobs, according to the notices.

The company offers semiconductor testing equipment, including probe cards, and other products. The industry has been benefiting from increased AI chip adoption and infrastructure spending.

FormFactor is among the employers that have been shedding workers amid more economic uncertainty.

Companies have cited various reasons for workforce reductions, including restructuring, closures, tariffs, market conditions and artificial intelligence, which can help automate repetitive tasks or generate text, images and code.

The tech industry — a key part of California’s economy — has been hit hard by job losses after the pandemic, which spurred more hiring, and amid the rise of AI tools that are reshaping its workforce.

As tech companies and startups compete fiercely to dominate the AI race, they’ve also cut middle management and other workers as they move faster to release more AI-powered products. They’re also investing billions of dollars into data centers that house computing equipment used to process the massive troves of information needed to train and maintain AI systems.

Companies such as chipmaker Nvidia and ChatGPT maker OpenAI have benefited from the AI boom, while legacy tech companies such as Intel are fighting to keep up.

FormFactor’s cuts are part of restructuring plans that “are intended to better align cost structure and support gross margin improvement to the Company’s target financial model,” the company said in a filing to the U.S. Securities and Exchange Commission this week.

The company plans to consolidate its facilities in Baldwin Park and Carlsbad, the filing said.

FormFactor didn’t respond to a request for comment.

FormFactor has been impacted by tariffs and seen its growth slow. The company employs more than 2,000 people and has been aiming to improve its profit margins.

In October, the company reported $202.7 million in third-quarter revenue, down 2.5% from the third quarter of fiscal 2024. The company’s net income was $15.7 million in the third quarter of 2025, down from $18.7 million in the same quarter of the previous year.

FormFactor’s stock has been up 16% since January, surpassing more than $67 per share on Friday.

Business

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Published

18 hours ago

January 10, 2026

Press Room

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Two people allegedly used $100 counterfeit bills at dozens of In-N-Out Burger restaurants in Southern California in a wide-reaching scam.

Glendale Police officials said in a statement Friday that 26-year-old Tatiyanna Foster of Long Beach was taken into custody last month. Another suspect, 24-year-old Auriona Lewis, also of Long Beach, was arrested in October.

Police released images of $100 bills used to purchase a $2.53 order of fries and a $5.93 order of a Flying Dutchman.

The Los Angeles County District Attorney’s Office charged Lewis with felony counterfeiting and grand theft in November.

Elizabeth Megan Lashley-Haynes, Lewis’s public defender, didn’t immediately respond to a request for comment.

Glendale police said that Lewis was arrested in Palmdale in an operation involving the U.S. Marshals Task Force. Foster is expected in court later this month, officials said.

”Lewis was found to be in possession of counterfeit bills matching those used in the Glendale incident, along with numerous gift cards and transaction receipts believed to be connected to similar fraudulent activity,” according to a police statement.

A representative for In-N-Out Burger told KTLA-TV that restaurants in Riverside, San Bernardino and San Diego counties were also targeted by the alleged scam.

“Their dedication and expertise resulted in the identification and apprehension of the suspects, helping to protect our business and our communities,” In-N-Out’s Chief Operations Officer Denny Warnick said. “We greatly value the support of law enforcement and appreciate the vital role they play in making our communities stronger and safer places to live.”

The company, opened in 1948 in Baldwin Park, has restaurants in nine states.

An Oakland location closed in 2024, with the owner blaming crime and slow police response times.

Company chief executive Lynsi Snyder announced last year that she planned to relocate her family to Tennessee, although the burger chain’s headquarters will remain in California.

Business

Newsom’s budget includes $200 million to make up for Trump’s canceled EV rebates, among other climate items

Published

1 day ago

January 10, 2026

Press Room

Newsom’s budget includes 0 million to make up for Trump’s canceled EV rebates, among other climate items

Gov. Gavin Newsom on Friday doubled down on California’s commitment to electric vehicles with proposed rebates intended to backfill federal tax credits canceled by the Trump administration.

The plan would allocate $200 million in one-time special funds for a new point-of-sale incentive program for light-duty zero-emissions vehicles. It was part of a sweeping $348.9-billion state budget proposal released Friday, which also included items to address air pollution and worsening wildfires, amid a projected $3-billion state deficit.

EVs have become a flashpoint in California’s battle against the Trump administration, which moved last year to repeal the state’s long-held authority to set strict tailpipe emission standards and eventually ban the sale of new gas powered cars.

Last year, Trump ended federal tax credits of up to $7,500 for EV customers that were part of President Biden’s 2022 Inflation Reduction Act. In September, his administration also let lapse federal authorization for California’s Clean Air Vehicle decal program, which allowed solo EV drivers to use carpool lanes.

“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world leading climate agenda,” Lindsay Buckley, spokesperson for the California Air Resources Board, said in an email. “This incentive program will help continue the state’s ZEV momentum, especially with the federal administration eliminating the federal EV tax credit and carpool lane access.”

Newsom had previously flip-flopped on this idea, first vowing to restore a state program that provided up to $7,500 to buy clean cars and then walking it back in September. That same month, a group of five automakers including Honda, Rivian, Hyundai, Volkswagen and Audi wrote a letter urging Newsom and state legislators to establish a $5,000 EV tax rebate to replace the lost federal incentives, Politico reported.

During his State of the State speech Thursday — one year after the devastating Palisades and Eaton fires in Los Angeles — Newsom said California “refuse[s] to be bystanders” while China and other nations take the lead on electric vehicles and the clean energy transition. He touted the state’s investments in solar, hydrogen, wind and nuclear power, as well as its recent move away from the use of any coal-fired power.

“We must continue our prudent fiscal management, funding our reserves, and continuing the investments Californians rely on, from education to public safety, all while preparing for Trump’s volatility outside our control,” the governor said in a statement. “This is what responsible governance looks like.”

Several environmental groups had been urging Newsom to invest more in clean air and clean vehicle programs, which they say are critical to the state’s ambitious goals for human health and the environment. Transportation is the largest source of climate and air pollution in California and is responsible for more than a third of global warming emissions, said Daniel Barad, Western states policy manager with the nonprofit Union of Concerned Scientists.

“As federal attacks threaten California’s authority to protect public health, incentives are more essential than ever to scale up clean cars and trucks,” Barad said. “The governor and legislative leaders must act now to fully fund zero-emission transportation and pursue new revenue to grow and sustain climate investments.”

Katelyn Roedner Sutter, California senior director with the nonprofit Environmental Defense Fund, called it “an essential step to save money for Californians, cut harmful pollution, spur innovation, and support the global competitiveness of our auto industry.”

While the budget proposal does not include significant new spending proposals, it contains other line items relating to climate and the environment. Among them are plans to continue implementing Proposition 4, the $10-billion climate bond approved by voters in 2024 for programs geared toward wildfire resilience, safe drinking water, flood management, extreme heat mitigation and other similar efforts.

Among $2.1 billion in climate bond investments proposed this year are $58 million for wildfire prevention and hazardous fuels reduction projects in vulnerable communities, and nearly $20 million to assist homeowners with defensible space to prevent fire. Water-related investments include $232 million for flood control projects and nearly $70 million to support repairs to existing or new water conveyance projects.

The proposal also lays out how to spend money from California’s signature cap-and-trade program, which sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances at quarterly auctions. State lawmakers last year voted to extend the program through 2045 and rename it cap-and-invest.

The spending plan includes a new tiered structure for cap-and-invest that first funds statutory obligations such as manufacturing tax exemptions, followed by $1 billion for the high speed rail project, $750 million to support the California Department of Forestry and Fire Protection, and finally secondary program funding such as affordable housing and low-carbon transit options.

But while some groups applauded the budget’s broad handling of climate issues, others criticized it for leaning too heavily on volatile funding sources for environmental priorities, such as special funds and one-time allocations.

The Sierra Club called the EV incentive program a crucial investment but said too many other items were left with “patchwork strategies that make long-term planning harder.”

“Just yesterday, the Governor acknowledged in his State of the State address that the climate risk is a financial risk. That is exactly why California needs climate investments that are stable and ongoing,” said Sierra Club director Miguel Miguel.

California Environmental Voters, meanwhile, stressed that the state should continue to work toward legislation that would hold oil and gas companies liable for damages caused by their emissions — a plan known as “Make Polluters Pay” that stalled last year amid fierce lobbying and industry pressure.

“Instead of asking families to absorb the costs, the Legislature must look seriously at holding polluters accountable for the harm they’ve caused,” said Shannon Olivieri Hovis, California Environmental Voters’ chief strategy officer.

Sarah Swig, Newsom’s senior advisor for climate, noted that the state’s budget plan came just days after Trump withdrew the United States from the United Nations Framework Convention on Climate Change, a major global treaty signed by nearly 200 countries with the aim of addressing global warming through coordinated international action.

“California is not slowing down on climate at a time when we continue to see attack after attack from the federal government, including as recently as this week with the Trump administration’s withdrawal from the UNFCCC,” Swig told reporters Friday. “California’s leadership has never mattered more.”