Bill Text: CA SB300 | 2015-2016 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Pawnbrokers: regulations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2015-10-01 - Chaptered by Secretary of State. Chapter 417, Statutes of 2015. [SB300 Detail]
Download: California-2015-SB300-Amended.html
Bill Title: Pawnbrokers: regulations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2015-10-01 - Chaptered by Secretary of State. Chapter 417, Statutes of 2015. [SB300 Detail]
Download: California-2015-SB300-Amended.html
BILL NUMBER: SB 300 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 2, 2015
AMENDED IN ASSEMBLY JUNE 11, 2015
AMENDED IN SENATE MAY 5, 2015
AMENDED IN SENATE APRIL 30, 2015
AMENDED IN SENATE MARCH 26, 2015
INTRODUCED BY Senator Mendoza
FEBRUARY 23, 2015
An act to amend Sections 21201, 21201.5, and 21208 of, and to add
and repeal Section 21201.6 of, the Financial Code, relating to
pawnbrokers.
LEGISLATIVE COUNSEL'S DIGEST
SB 300, as amended, Mendoza. Pawnbrokers: regulations.
Existing
(1) Existing law regulates
pawnbrokers and requires a written contract for every loan by a
pawnbroker for which goods are received in pledge as security, as
specified, and requires a copy of that contract to be furnished to
the borrower. Existing law requires the contract to provide a 4-month
loan period.
This bill, on and after January 1, 2017, would permit the
requirements for an original written contract to be met
electronically, provided that the contract and transaction comply
with the provisions of the Uniform Electronic Transactions Act and
meet certain disclosure requirements. The bill would also specify
that the contract be for a minimum of 4 months.
Existing
(2) Existing law requires a
pawnbroker, within one month after the loan period expires, to notify
the borrower at his or her last known address of the termination of
the loan period, by a means for which verification of mailing or
delivery of the notification can be provided by the pawnbroker, and
provides for extending the right of redemption for a period of 10
days from the date that notice is mailed.
This bill would instead require the pawnbroker to provide that
notification to the pledgor at his or her last known mailing or
electronic address, 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, as specified. The
bill would provide that the electronic notice of the termination of
the loan period would be valid only if the pledgor has previously
responded to an electronic communication sent by the pawnbroker to
the pledgor's last known electronic address and would require the
pledgor to affirm the electronic address on file, as prescribed.
Existing
(3) Existing law permits a
pledgor and a pawnbroker to agree to a new loan to become effective
at the end of the loan period and requires the new loan to be
processed as a new loan subject to loan origination, storage, and
other fees as specified.
This bill would permit a replacement loan to be issued at the
request of the pledgor with consent of the pawnbroker before the
expiration of the redemption period, to become effective on the date
it is issued, subject to specified requirements, including, but not
limited to, that the pledgor pay off all outstanding charges from the
prior loan then due before a replacement loan may be issued. The
bill would also permit the replacement loan to be issued
electronically, beginning January 1, 2016, subject to the same
conditions for the original written contract described above.
Existing
(4) Existing law requires a
pawnbroker to comply with the reporting requirements imposed on
secondhand dealers, including the requirement to obtain and report
the customer's fingerprint.
This bill would require a pawnbroker who has issued a loan
electronically, instead of obtaining and reporting the customer's
fingerprint, to electronically deposit the loan proceeds into a
deposit depository account held in the
name of the pledgor, as specified. pledgor at
a depository institution located within the United States, and upon
request by any peace officer, make available the account information
used to deposit the loan proceeds.
Because a knowing violation of these provisions would be a crime,
this bill would impose a state-mandated local program.
(5) 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.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to permit
the citizens of California Californians the
ability to transact pawn or collateral loans in an efficient and
expeditious manner wherever they may be located. It is further the
intent of the Legislature to permit such loans to be made in
conformity with the Uniform Electronic Transactions Act, as set forth
in Title 2.5 (commencing with Section 1633.1) of Part 2 of Division
3 of the Civil Code.
SEC. 2. 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 four
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 his
or her 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 fewer than four
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 his or her possession every
article pledged to him or her for the duration of the loan period.
During such 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.
(e) The pawnbroker shall notify the pledgor at his or her 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. 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." The electronic notice of the termination of the loan
period, if the option is offered by the pawnbroker, 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.
(f) The posted schedule of charges required pursuant to Section
21200.5 shall contain a notice informing the pledgor that if he or
she desires, 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.
(g) 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 his or her assigns, to the
pledged article, to hold and dispose of as his or her 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.
(h) The pawnbroker shall not sell any article of pledged property
until he or she has become vested with the title to that property
pursuant to this section. The sale of pledged property is a
misdemeanor pursuant to Section 21209.
SEC. 2. 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
borrower. pledgor. The loan contract
shall provide a four-month loan period, loan
period that is a minimum of four months, shall set forth the
loan period and the date on which the loan is due and payable, and
shall clearly inform the borrower pledgor
of his or her right to redeem the pledge during the loan
period.
Every
(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
borrower's 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
four 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."
Every
(c) Every pawnbroker shall retain
in his or her possession every article pledged to him or her for
a period of four months. the duration of the
loan period. During such period the borrower
pledgor may redeem the articles upon payment of the
amount of the loan and the applicable charges. If the
borrower 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 consumer
pledgor the next calendar day when both the pawnbroker's
store and the storage facility are open, not to exceed two business
days.
If
(d) If any pledged article is not
redeemed during the four-month loan period as
provided herein, and the borrower pledgor
and pawnbroker do not mutually agree in writing to extend the
loan period, the pawnbroker shall notify the borrower
pledgor within one month after expiration of the
loan period. If the pawnbroker fails to notify the borrower
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 borrower pledgor at
his or her last known mailing or electronic address of the
termination of the loan period, by a means for which verification of
mailing or delivery of the 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 include a statement
that: 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."
However, the
(e) The posted schedule of
charges required pursuant to Section 21200.5 shall contain a notice
informing the borrower pledgor that if
he or she desires, 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.
If
(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 his or her assigns, to the pledged article, to hold
and dispose of as his or her 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 he or she has become vested with
the title to that property pursuant to this section. The
(g) The sale of pledged property
is a misdemeanor pursuant to Section 21209.
SEC. 3. Section 21201.5 of the Financial Code is amended to read:
21201.5. (a) During the contractual loan period and any extension
thereof, but prior to the start of the 10-day grace period provided
in subdivision (d) of Section 21201, a pledgor may request, and a
pawnbroker may consent to, a replacement loan to take effect upon the
expiration of the loan period stated in the active loan contract
delivered to the pledgor under Section 21201 or this section.
(b) Alternatively, a pledgor may request, and a pawnbroker may
consent to, a replacement loan during the 10-day grace period
provided in subdivision (d) of Section 21201. Any such replacement
loan shall become effective on the date it is issued.
(c) All of the following shall apply to a replacement loan issued
pursuant to this section:
(1) The loan shall be processed as, and deemed to be, a new loan
subject to all other fees and charges permitted by this chapter.
(2) Before a replacement loan may be issued, the pledgor shall pay
off all outstanding charges from the prior loan then due, including
interest or any loan writing, storage, notification, or other fee
authorized in this chapter, in cash or another form acceptable to the
pawnbroker. The pledgor's payment may be delivered to the pawnbroker
by any method, method acceptable
to the pawnbroker, including, but not limited to, United States
mail, private mail, a personal representative, or electronic
transfer, provided that the manner of payment is acceptable
to the pawnbroker. transfer. If insufficient
payment is tendered by the pledgor or is not tendered in
cash or a form unacceptable
acceptable to the pawnbroker, the pawnbroker shall, if
commercially reasonable, return the payment in the same manner that
the payment was delivered by the pledgor, or by another commercially
reasonable manner, within five business days, and shall include a
statement advising the pledgor the reason the payment was rejected.
The pawnbroker is under no obligation to enter into a replacement
loan if the amount is insufficient or the form
method of payment or method form
of tender is unacceptable not cash or
acceptable to the pawnbroker.
(3) The unpaid balance of the prior loan shall be debited to the
replacement loan on which the same article or articles have been
pledged. The replacement loan contract shall disclose the amount of
the prior loan that is debited and shall otherwise be consistent with
Section 21201.
(4) If the pledgor requests a replacement loan in person or
electronically, the pledgor's consent to the terms of the replacement
loan shall be deemed given when he or she signs the written
replacement loan contract in person or electronically in conformity
with Section 21201.6.
(5) If the pledgor requests a replacement loan by mail or through
a personal representative, the pledgor's consent to the terms of the
replacement loan shall be deemed given when all required charges from
the prior loan then due are paid in a form acceptable to the
pawnbroker. The principal amount of a replacement loan requested by
mail or through a personal representative shall not exceed the
principal amount of the prior loan.
(6) The terms of the replacement loan shall be consistent with
this chapter on the date the replacement loan is issued.
(7) The replacement loan shall be evidenced by a written agreement
or electronic record. The pawnbroker shall mail or otherwise
transmit a copy of the written agreement or electronic record to the
pledgor within five business days following receipt of payment by
means for which verification of mailing or electronic transmittal can
be provided by the pawnbroker.
SEC. 4. Section 21201.6 is added to the Financial Code, to read:
21201.6. The requirement for a written contract signed by the
pledgor as set forth in Section 21201.5 may be met electronically if
all of the following conditions are satisfied:
(a) The contract and transaction comply with the provisions of the
Uniform Electronic Transactions Act, as set forth in Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, as may be applicable at the time that the loan is entered into
between the pawnbroker and the pledgor.
(b) Any written disclosures specified in this chapter to be set
forth in a specified minimum type size are conspicuously presented to
the pledgor prior to his or her execution of the electronic
contract.
(c) The pawnbroker makes one of the following disclosures:
(1) If the principal loan amount is below two thousand five
hundred dollars ($2,500), the pawnbroker discloses the maximum
compensation due a pawnbroker as set forth in Section 21200.7 prior
to the pledgor's execution of the electronic contract.
(2) If the principal loan amount is two thousand five hundred
dollars ($2,500) or more, the pawnbroker discloses the provisions of
Sections 21051 and 22054 prior to the pledgor's execution of the
electronic contract.
(d) This section shall remain in effect only until January 1,
2017, and as of that date is repealed.
SEC. 5. Section 21201.6 is added to the Financial Code, to read:
21201.6. The requirement for a written contract signed by the
pledgor as set forth in Sections 21201 and 21201.5 may be met
electronically if all of the following conditions are satisfied:
(a) The contract and transaction comply with the provisions of the
Uniform Electronic Transactions Act, as set forth in Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, as may be applicable at the time that the loan is entered into
between the pawnbroker and the pledgor.
(b) Any written disclosures specified in this chapter to be set
forth in a specified minimum type size are conspicuously presented to
the pledgor prior to his or her execution of the electronic
contract.
(c) The pawnbroker makes one of the following disclosures:
(1) If the principal loan amount is below two thousand five
hundred dollars ($2,500), the pawnbroker discloses the maximum
compensation due a pawnbroker as set forth in Section 21200.7 prior
to the pledgor's execution of the electronic contract.
(2) If the principal loan amount is two thousand five hundred
dollars ($2,500) or more, the pawnbroker discloses the provisions of
Sections 21051 and 22054 prior to the pledgor's execution of the
electronic contract.
(d) This section shall become operative on January 1, 2017.
SEC. 6. Section 21208 of the Financial Code is amended to read:
21208. (a) Except as provided in subdivision (b),
(c), a pawnbroker shall comply with the
reporting requirements imposed on secondhand dealers under Article 4
(commencing with Section 21625) of Chapter 9 of Division 8 of the
Business and Professions Code.
(b) A pawnbroker who has issued a loan electronically pursuant to
Section 21201.6 shall, in lieu of obtaining and reporting the
customer's fingerprint as set forth in subdivision (g) of Section
21628 of the Business and Professions Code, electronically deposit
the loan proceeds into a deposit account held in the name of the
pledgor at a depository institution located in the United States.
(b) A pawnbroker who has issued a loan electronically pursuant to
Section 21201.6 shall electronically deposit the loan proceeds into a
depository account held in the name of the pledgor at a depository
institution located within the United States.
(c) A pawnbroker who has issued a loan electronically pursuant to
Section 21201.6 shall make available, upon request by any peace
officer, the account information used to deposit the loan proceeds,
in lieu of obtaining and reporting the customer's fingerprint as set
forth in subdivision (g) of Section 21628 of the Business and
Professions Code.
SEC. 7. 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.
