On January 9, 2024, the California Department of Financial Protection and Innovation (DFPI) announced that it entered into a consent order with a Delaware fintech company that provided California consumers with access to an internet-based platform for merchants to offer installment payments for the purchase of outdoor-adventure equipment.

According to the consent order, since at least January 2021, the company has contracted with a third-party servicer to service all installment-payment contracts with the company’s customers.  Before the customers would make a first payment, the servicer provided information to them on how to make payments without incurring fees, and it also provided information on alternate ways to make payments, e.g., by phone, through the servicer’s website, or by setting up recurring electronic payments, all of which incurred a convenience fee.

Although the company ensured that its customers had an option to make fee-free payments, for a period of time the company failed to inform customers that alternate fee-based arrangements were available until after its customers had entered their payment contracts with the company.  The DFPI found this practice to be deceptive.

Under the consent order, the company agreed to pay a $50,000 penalty and to disclose to California consumers the existence and cost of any potential third-party servicer fees when those consumers enter into installment contracts with the company.​

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