BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 75
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          Date of Hearing:   April 5, 2011

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
                   AB 75 (Hill) - As Introduced:  December 22, 2010
           
          SUBJECT  :   Documents: notaries public: solicitations.

           SUMMARY  :   Revises current provisions of laws pertaining to 
          solicitations and public notaries, and authorizes the Secretary 
          of State (SOS) to refuse to perform a service or refuse a filing 
          based on a reasonable belief that the service or filing is 
          fraudulent, as specified.  Specifically,  this bill  :  

          1)Expands existing prohibitions on nongovernmental entities 
            implying a governmental connection for solicitation purposes 
            to federal entities, as specified.

          2)Requires the disclosures on solicitations to be conspicuously 
            displayed in certain locations, type, and manner, as 
            specified.

          3)Prohibits the use of a title, trade, or brand name in a 
            solicitation that could be reasonably interpreted or construed 
            as implying any federal, state, or local government 
            connection, approval, or endorsement, including, but not 
            limited to the following terms: "agency;" "administrative;" 
            "assessor;" "board;" "bureau;" "collector;" "commission;" 
            "committee;" "department;" "division;" "recorder;" "unit;" 
            "federal;" "state;" "county;" "city;" or "municipal;" or, the 
            name or division of any governmental agency.

          4)Prohibits the specification of a date or time period when 
            payment to the soliciting nongovernmental person, firm, 
            corporation, or association is due, including but not limited 
            to the following terms: "due date;" "due now;" "remit by;" 
            "remit immediately;" "payment due'" "pay now;" "pay 
            immediately;" or, "pay no later than" unless the solicitation 
            displays in the same sentence as the date or time period 
            specified how the information being solicited will be used, a 
            description of the product or service that is to be provided 
            and to what government agency it shall be rendered, or how the 
            solicited funds or membership fees will be used, as 
            applicable.








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          5)Prohibits stating or implying in a solicitation that a payment 
            to the nongovernmental entity is mandatory, required by law, 
            or that penalties, fines or consequences will occur if payment 
            is not made to the soliciting nongovernmental entity.

          6)Makes a violation of the above requirements a misdemeanor 
            punishable by imprisonment in a county jail not exceeding six 
            months, or by a fine not exceeding $2,500, or by both a fine 
            and imprisonment.

          7)States that a person harmed as a result of the violation of 
            this bill is entitled to recover, in addition to any other 
            available remedies, damages in an amount equal to three times 
            the amount solicited.

          8)Defines "conspicuous" or "conspicuously" to mean displayed 
            apart from other print on the page, envelope, outside cover, 
            or wrapper and in not less than 12-point boldface font type in 
            capital letters that is at least 2-point boldface font type 
            sizes larger than the next largest print on the page, envelope 
            outside cover, or wrapper and in contrasting type, layout, 
            font, or color in a manner that clearly calls attention to the 
            language.

          9)Adds a power of attorney to the types of instruments for which 
            a proof of the execution is prohibited and prohibits a proof 
            of the execution for any instrument requiring a notary public 
            to obtain a thumbprint from the party signing the document in 
            the notary public's journal.

          10)Revises the form of certificate that may be used for proof of 
            execution.

          11)Specifies that certain provisions of existing law apply only 
            to a notary public employed by a financial institution.

          12)Deletes the prescribed maximum fees a notary public may 
            charge for specified services.

          13)Authorizes SOS to refuse to perform a service or refuse a 
            filing based on a reasonable belief that the service or filing 
            is being requested for an unlawful, false, or fraudulent 
            purpose, to promote or conduct an illegitimate object or 
            purpose, or is being requested or submitted in bad faith or 








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            for the purpose of harassing or defrauding a person or entity.

          14)Makes technical, conforming changes.

           EXISTING LAW  :

          1)Makes it unlawful for a nongovernmental entity to solicit 
            funds or information by means of mailing, electronic message, 
            or Internet Web site that contains a seal, insignia, trade, or 
            brand name, or any other term or symbol that reasonably could 
            be interpreted or construed as implying any state or local 
            governmental connection, approval, or endorsement, as 
            specified.

          2)Requires a business to include the contact information for a 
            referenced governmental agency in an unsolicited mailing that 
            offers to assist the recipient in dealing with the 
            governmental agency and makes a violation of these or other 
            provisions related to advertising a misdemeanor, punishable by 
            imprisonment in the county jail not exceeding six months, a 
            fine not exceeding $1,000, or both.

          3)Makes it unlawful for a person to make any untrue or 
            misleading statements in any manner in connection with the 
            offering or performance of an assessment reduction filing 
            service.

          4)Provides that an untrue or misleading statement includes 
            representing that an offeror of an assessment reduction filing 
            service is, or is affiliated with, any governmental entity by, 
            among other things, the use of a business name including the 
            word "appeal" or "tax" and any of a list of terms, including 
            "agency," "bureau," or "department."

          5)Authorizes proof of the execution of an instrument by certain 
            persons and prescribes the form for that proof. 

          6)Prohibits a proof of the execution of any of several types of 
            specified instruments, including a grant deed, mortgage, deed 
            of trust, quitclaim deed, or security agreement.

          7)Prescribes the duties of a notary public, including the duty 
            to demand acceptance and payment of foreign and inland bills 
            of exchange, or promissory notes, to protest them for 
            nonacceptance or nonpayment, and to exercise any other powers 








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            and duties that by the law, may be performed by notaries. 

          8)Provides that a protest is a certificate of dishonor made by a 
            United States consul or vice consul, or a notary public or 
            other person authorized to administer oaths by the law of the 
            place where dishonor occurs. 

          9)Prescribes the maximum fees a notary public may charge for 
            specified services.

          10)Establishes the fees SOS is authorized to charge for the 
            provision of specified business services.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author's office, "Over 
          the past few years, deceptive solicitation schemes have arisen 
          to take advantage of the statutorily required filings with the 
          SOS's office.  The misleading solicitations sent to companies 
          sometimes appear to be official government documents and imply 
          that the company must pay an exorbitant fee in order to file the 
          documents with the SOS.  In many cases the solicitations 
          threaten penalties if the company does not file with the third 
          party entity, though businesses are not required to do so.

          "Under current law, false documents can easily be notarized and 
          submitted to the SOS for processing.  When a notarized document 
          is presented to the SOS, the Secretary is only permitted to 
          determine the authenticity of the notary public signature, not 
          the underlying authenticity of the document.  If the notary 
          signature is valid, the SOS must authenticate the notary's 
          signature.  After verifying the signature, the SOS must attach 
          its seal to the document, which makes the document appear 
          authentic, though the underlying statements have not been 
          verified.

          "The Attorney General's office has tracked more than 50 entities 
          engaged in this type of ploy and has received over 10,000 
          complaints from the public about these government look-a-like 
          forms and threats.  In one lawsuit brought by the Attorney 
          General's office, the defendants sent out 986,000 misleading 
          solicitations by mail."









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           Background  .  According to information provided by the author, 
          bogus documents are often notarized and submitted to the SOS for 
          processing.  When a notarized document is presented to the SOS 
          for authentication, the SOS is only permitted to determine the 
          authenticity of the notary public's signature and seal, not the 
          authenticity of the underlying document.  Once the SOS's 
          certificate is attached to a document, even if the underlying 
          document is not authentic, it can be used to harass people with 
          false financial claims and to obtain fraudulent identification 
          indicating diplomatic immunity.  Other entities may view the 
          SOS's certificate as proof that the underlying documents are 
          valid, rather than simply an authentication of the notary 
          public's signature and seal. 

          A "subscribing witness" is a person who witnesses the signing of 
          a document and appears before a notary public on behalf of the 
          principal signer to attest that the principal signer has signed 
          the document.  Although current law prevents the use of a 
          subscribing witness as proof of signing on specific real 
          property documents, a subscribing witness can currently be used 
          when notarizing a power of attorney document that could be later 
          used to fraudulently sign multiple real property deeds or other 
          estate documents. 

          A "protest" is a written statement by a notary public, or other 
          official authorized to administer oaths, identifying a 
          negotiable instrument, and certifying that it was presented for 
          payment or the reason why the instrument was not presented for 
          payment, and that the negotiable instrument was not accepted or 
          paid.  Examples of negotiable instruments include a check or 
          promissory note.  The failure to pay after presentment is called 
          a "dishonor."  The purpose of the protest is to serve as a 
          formal statement of dishonor and to initiate the formal process 
          required to begin civil proceedings to secure payment for the 
          negotiable instrument that has been dishonored. 

          Notaries public are currently required to perform "protests" and 
          issue certificates of dishonor related to nonpayment of 
          negotiable instruments, such as a check or promissory note.  The 
          protest can then be used to begin civil legal proceedings.  
          According to information provided by the author, this protest 
          procedure is archaic and is seldom performed for legitimate 
          purposes.  Bogus protests have been used in tax evasion schemes, 
          as well as to harass people and entities with false financial 
          claims. 








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          This bill is a reintroduction of AB 898 (Lieu) and AB 2654 
          (Hill) of 2010, which were vetoed.  In his veto message of both 
          bills, the Governor cited concern over the inclusion of a 
          private right of action.  This bill contains the private right 
          of action, authorizing the recovery of an amount equal to three 
          times the amount solicited.

           Support  .  The SOS writes in support, "Once the SOS's certificate 
          is attached to the document, if the underlying document is not 
          authentic (often referred to as 'bogus') it can be used to file 
          false financial claims against people and to obtain fraudulent 
          identification implying that the holder of the document has 
          diplomatic immunity from prosecution.  Other entities in receipt 
          of the documents may view the SOS's certificate as proof that 
          the underlying documents are valid rather than simply as an 
          authentication of the notary public's signature.  By providing 
          the SOS the discretion to refuse a filing that is unlawful, 
          false or fraudulent, the likelihood of these occurrences will 
          decrease."

           Previous legislation  .  

          AB 898 (Lieu) of 2010, revises current provisions of laws 
          pertaining to solicitations and public notaries.  This bill was 
          vetoed.

          AB 2654 (Hill) of 2010, specifies requirements for solicitations 
          that could be construed or interpreted as involving a state or 
          federal governmental entity, including certain disclosures on 
          the front and back of every page of the solicitation and the 
          envelope; and, establishes penalties for violating specified 
          disclosure requirements and makes various technical changes.  
          This bill was vetoed.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Association of Realtors
          Highland Area Chamber of Commerce
          Long Beach Area Chamber of Commerce
          Secretary of State Debra Bowen
          Simi Valley Chamber of Commerce
          South Bay Association of Chambers of Commerce








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           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Rebecca May / B.,P. & C.P. / (916) 
          319-3301