Bill Text: CA SB1198 | 2023-2024 | Regular Session | Amended

California Senate Bill 1198

Bill Title: Pawnbrokers: fees and charges.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-04-22 - Set for hearing April 29. [SB1198 Detail]

Download: California-2023-SB1198-Amended.html

Amended IN Senate April 08, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1198

Introduced by Senator Roth

February 15, 2024

An act to amend Sections ~~21200.6, 21201,~~ 21200.6 and 21201.2 of, and to amend and renumber Section 21200.9 of, and to add Section 21200.9 to, the Financial Code, relating to pawnbrokers.

LEGISLATIVE COUNSEL'S DIGEST

SB 1198, as amended, Roth. Pawnbrokers: fees and charges.

Existing law regulates the activities of pawnbrokers and makes a violation of these provisions a misdemeanor, as specified. Existing law authorizes the district attorney or the Attorney General, in the name of the people of the State of California, to bring an action to enjoin the violation or the threatened violation of a regulation made pertaining to certain provisions regulating pawnbrokers. Existing law authorizes a pawnbroker to collect a handling and storage charge for pawned articles at the time property is redeemed or a replacement loan is issued. Existing law establishes the maximum amount that may be charged based on the size of pawned articles, as specified.

This bill would additionally authorize a pawnbroker to collect a security charge and would increase the permitted handling, storage, and security charges depending on the size of the pawned articles, as specified. The bill would authorize a pawnbroker, in addition to other allowed charges, to collect a remote transaction fee, as specified.

Existing law requires a loan made by a pawnbroker for which goods are received in pledge as security to be evidenced by a written contract, as specified, and requires the contract to, among other things, provide a loan period that is a minimum of 4 months. Existing law permits a pawnbroker to charge a fee in the amount of up to $5 for services and costs pertaining to preparation of a 10-day notice when a pledged item is not redeemed during the loan period.

This bill would decrease the minimum loan period to 3 months and make a conforming change to a related notice provision. By further restricting the loan period in that requirement, the violation of which is a crime, the bill would impose a state-mandated local program. The bill would expand the services and costs for which the above-described noticing fee may be charged to include the mailing or electronic transmission of the notice, and would increase the maximum amount of the fee to $7.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
~~This bill would provide that no reimbursement is required by this act for a specified reason.~~

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: ~~YES~~NO

The people of the State of California do enact as follows:

SECTION 1.

Section 21200.6 of the Financial Code is amended to read:

21200.6.

(a) In addition to other allowed charges, at the time property is redeemed or a replacement loan is issued pursuant to Section 21201.5, the pawnbroker may collect a handling, storage, and security charge for pawned articles. The maximum amount that may be charged pursuant to this section is in accordance with the following schedule:

(1) Five dollars ($5) or 2.5 percent of the loan amount for any article that can be contained within one cubic foot.

(2) Ten dollars ($10) or 2.5 percent of the loan amount for any article that cannot be contained within one cubic foot, but can be contained within three cubic feet.

(3) Twenty dollars ($20) or 2.5 percent of the loan amount for any article that cannot be contained within three cubic feet, but can be contained within six cubic feet.

(4) Thirty dollars ($30) or 2.5 percent of the loan amount for any article that cannot be contained within six cubic feet and five dollars ($5) for each additional cubic foot in excess of six cubic feet.

(b) For purposes of this section, cubic feet shall be determined by multiplying the width of an article, at its greatest width, by the depth of an article, at its greatest depth, by the height of an article, at its greatest height.

SEC. 2.

Section 21200.9 of the Financial Code is amended and renumbered to read:

21200.10.

No licensed pawnbroker shall promise any seller of tangible personal property that the seller may repurchase property sold to the pawnbroker.

SEC. 3.

Section 21200.9 is added to the Financial Code, to read:

21200.9.

In addition to other allowed charges, a pawnbroker may collect a remote transaction fee, if the pledgor elects to request a replacement loan or to redeem a loan through electronic means, of up to 3.0 percent of the transaction amount to cover the recurring costs associated with software applications.

SEC. 4.Section 21201 of the Financial Code is amended to read:
21201.
(a)Every loan made by a pawnbroker for which goods are received in pledge as security shall be evidenced by a written contract, a copy of which shall be furnished to the pledgor. The loan contract shall provide a loan period that is a minimum of three months, shall set forth the loan period and the date on which the loan is due and payable, and shall clearly inform the pledgor of their right to redeem the pledge during the loan period.
~~(b)Every loan contract shall contain the following notice, in at least 8-point boldface type and circumscribed by a box, immediately above the space for the pledgor’s signature:~~
“You may redeem the property you have pledged at any time until the close of business on ____ [fill in date no less than three months from date loan begins]. To redeem, you must pay the amount of the loan and the applicable charges which have accrued through the date on which you redeem.”
(c)Every pawnbroker shall retain in their possession every article pledged to them for the duration of the loan period. During that period, the pledgor may redeem the articles upon payment of the amount of the loan and the applicable charges. If the pledgor and the pawnbroker agree in writing that the pawned property may be stored off premises, following the request for redemption of the loan, the pawnbroker shall return the pledged property to the pledgor the next calendar day when both the pawnbroker’s store and the storage facility are open, not to exceed two business days.
(d)If any pledged article is not redeemed during the loan period as provided herein, and the pledgor and pawnbroker do not mutually agree in writing to extend the loan period, the pawnbroker shall notify the pledgor within one month after expiration of the loan period. If the pawnbroker fails to notify the pledgor within one month after the expiration of the loan period, the pawnbroker shall not charge interest from the day after the expiration of the one-month period. The pawnbroker shall notify the pledgor at the pledgor’s last known mailing or electronic address of the termination of the loan period, by a means for which verification of mailing or, at the sole option of the pledgor, electronic transmission of the notification can be provided by the pawnbroker, and extending the right of redemption, during posted business hours, for a period of 10 days from date of mailing or electronic transmission of that notice. Electronic notice of the termination of the loan period shall be valid if the pledgor has previously responded to an electronic communication sent by the pawnbroker to the pledgor’s last known electronic address provided by the pledgor. Upon the initiation of each new or replacement loan, the pledgor shall affirm that the current electronic address on file with the pawnbroker is valid. The 10-day notice shall state, in substantially the same format as the following: “If the tenth day falls on a day when the pawnshop is closed, the time period is extended to the next day that the pawnshop is open.”
(e)The posted schedule of charges required pursuant to Section 21200.5 shall contain a notice informing the pledgor that if they desire, the pawnbroker shall send the notice of termination of the loan period by registered or certified mail with return receipt requested, upon prepayment of the mailing costs.
(f)If any pledged article is not redeemed within the 10-day notice period, the pawnbroker shall become vested with all right, title, and interest of the pledgor, or the pledgor’s assigns, to the pledged article, to hold and dispose of as the pawnbroker’s own property. Any other provision of law relating to the foreclosure and sale of pledges shall not be applicable to any pledge the title to which is transferred in accordance with this section. The pawnbroker shall not sell any article of pledged property until they have become vested with the title to that property pursuant to this section.
~~(g)The sale of pledged property is a misdemeanor pursuant to Section 21209.~~

SEC. 5.SEC. 4.

Section 21201.2 of the Financial Code is amended to read:

21201.2.

If the pledgor fails to redeem any pawned item during the loan period, thereby obliging the pawnbroker to mail or electronically transmit the notice required under Section 21201, the pawnbroker may charge a fee of up to seven dollars ($7) for services and costs pertaining to the preparation and mailing or electronic transmission of the notice, in addition to any other allowed charges.

SEC. 6.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.