California Senate Bill 362 passed, waiting on Gov
A very INTEREST-ing bill was recently passed in California that will give commercial financing providers some more work to do when it comes to using the terms "Interest" and "rate" in their communications that might deceive a recipient.
From the Counselor Library, and if you aren't signed up to their newsletter, you need to be, an email says the following:
"On September 10, 2025, the California legislature passed Senate Bill 362, which amends the California Commercial Financing Disclosure Law ("CCFDL"). The bill restricts the use of the terms "interest" and "rate" and classifies certain violations of the CCFDL as unfair, deceptive, or abusive acts and practices under the California Consumer Financial Protection Law.
Under S.B. 362, a commercial financing provider may not use the term "interest" or the term "rate" in a manner that is likely to deceive a recipient. Use of the term "interest" or "rate" is not deceptive if the metric is an annual interest rate or annual percentage rate that is either fixed or floating for the financing period and is expressed as a margin over an index rate."
They go on to provide examples that could be confusing, like this one:
describing the price of credit as "X% fee rate" or "Y% factor rate," particularly when those "rates" diverge materially from the APR.
Gov Newsome has until October 12, 2025 to sign or veto. If it becomes law it goes into effect Jan 1, 2026.
To read more, visit the Counselor Library.
Drop your comments on this bill and thoughts if it becomes law.