BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 391|
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THIRD READING
Bill No: AB 391
Author: Pan (D), et al.
Amended: 6/27/12 in Senate
Vote: 27 - Urgency
SENATE PUBLIC SAFETY COMMITTEE : 7-0, 5/8/12
AYES: Hancock, Anderson, Calderon, Harman, Liu, Price,
Steinberg
SENATE APPROPRIATIONS COMMITTEE : 6-0, 6/4/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Steinberg
NO VOTE RECORDED: Price
ASSEMBLY FLOOR : Not relevant
SUBJECT : Secondhand dealers and pawnbrokers: electronic
reporting
SOURCE : Office of the Attorney General
DIGEST : This bill implements the currently unfunded
system for electronic reporting of transactions in pawned
and secondhand goods through fees from secondhand property
dealers and pawnbrokers.
Senate Floor Amendments of 6/27/12 (1) exclude coin dealers
from the requirement that secondhand dealers and pawn
brokers report specified transactions electronically and
(2) state legislative findings that pawnbrokers and
secondhand dealers will receive a clear benefit from
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reporting transactions electronically.
Note:This bill passed the Senate on 6/14/12 (35-0) and was
returned from the Assembly for these amendments.
ANALYSIS : Existing law:
Secondhand Dealers and Pawn Generally
Existing law includes a statement of legislative intent to
curtail the dissemination of stolen property, to facilitate
the recovery of stolen property and to detect possible
sales tax evasion by means of a uniform, statewide,
state-administered program of regulation of persons whose
principal business is dealing in tangible personal
property, as specified. (Business & Professions Code (BPC)
Section 21625; Financial Code (FIN) Section 21051)
Existing law includes legislative intent that reports of
transactions in pawned and secondhand property should be
correlated with law enforcement reports so as to trace and
recover stolen property. (BPC Section 21625)
Existing law, for purposes of the system for curtailing
dissemination of stolen property, defines a "secondhand
dealer" as any person or entity whose business includes
buying, selling, trading, taking in pawn, accepting for
sale on consignment or auctioning any "tangible personal
property." (BPC Section 21625)
Existing law defines "tangible personal property" thus:
1.All secondhand personal property that has a serial number
or personalized markings;
2.All tangible property, new or used, taken by a pawnbroker
as security for a loan;
3.All tangible personal property commonly sold by
secondhand dealers that constitutes a significant class
of stolen property. (BPC Section 21627, subds. (a)-(b))
Existing law provides that tangible personal property does
not include new goods purchased by a secondhand dealer from
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a bona fide manufacturer or distributor. (BPC Section
21627, subd. (c))
Existing law provides that tangible personal property does
not include coins, monetized bullion or commercial grade
ingots of precious metals. (BPC Section 21627, subd. (d))
Existing law defines a pawnbroker as a "person engaged in
the business of receiving goods in pledge for security for
a loan." (FIN Section 21000)
Existing law defines a "coin dealer" as a person or entity
"whose principal business is the buying, selling, and
trading of coins, monetized bullion, or commercial grade
ingots of gold, or silver, or other precious metals." (BPC
Section 21626, subd. (b)) A coin dealer is not a
secondhand dealer, except as concerns transactions in
tangible personal property. (BPC Section 21626, subd. (a))
Existing law includes a statement of legislative intent to
require the uniform statewide reporting of transactions in
and acquisitions of secondhand and pawned property by
pawnbrokers and secondhand dealers. (BPC Section 21625;
FIN Section 21051)
Existing law provides that pawnbrokers and coin dealers
shall report daily on forms approved or provided by the
Department of Justice (DOJ), all personal property
purchased, taken in trade, taken in pawn, etc., to local
law enforcement. The report shall include the following
information:
1.The name and current address and identification of the
intended seller or pledgor of the property;
2.A complete and reasonably accurate description of
serialized or nonserialized property;
3.A certification by the intended seller or pledgor that he
or she is the owner of the property, or has the authority
of the owner to sell or pledge the property and that any
information provide is true and complete, and a legible
fingerprint taken from the intended seller or pledgor.
(BPC Section 21628)
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Existing law provides the following concerning the
identification that must be offered by a pledgor of
property in pawn or seller of property:
1.The identification provided by the pledgor shall include
a photograph, a description or both, and a signature.
2.The identification shall be verified by the person taking
the property.
3.The following forms of identification are acceptable:
U.S. passport;
Driver's license issued by any state or Canada;
Identification card issued by any state;
Identification card issued by the United States;
Matricula Consular, in addition to another form; or
A passport from any other county, or a Matricula
Consular, in addition to another form of
identification bearing an address.
Existing law generally provides that violations of the
licensing and reporting requirements for transactions in
pawned or (secondhand) tangible personal property are
misdemeanors. (BPC Section 21645; FIN Section 21209)
Electronic Reporting of Transactions by Secondhand Dealers
and Pawnbrokers in Tangible Personal Property
Existing law requires secondhand dealers, as defined, to
make reports to local law enforcement by electronic means
about transactions in tangible personal property, as
follows:
1.DOJ and local law enforcement agencies, in consultation
with representatives from the secondhand dealer and coin
dealer businesses, to develop a standard format to be
used statewide to transmit a report electronically of all
pawned and secondhand property, as follows:
2.Twelve months after the format and the categories have
been developed, each secondhand dealer and coin dealer
will be required to electronically report using this
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format the information required by this bill under these
reporting categories.
3.Until that time, each secondhand dealer and coin dealer
will be allowed to either continue to report this
information using existing forms and procedures or may
begin electronically reporting this information under the
reporting categories and using the format described in
this bill as soon as each has been developed. (Penal
Code Section 21628, subd. (j))
Existing law requires a coin dealer who engages in less
than ten specified transactions each week involving
tangible personal property to report the transaction on a
paper form developed by DOJ. The form shall be transmitted
each day by facsimile transmission or by mail to the chief
of police or sheriff. A transaction shall consist of not
more than one item. When a coin dealer engages in at least
10 transactions per week, the coin dealers shall report
electronically, as with any pawnbroker or secondhand
dealer. (BPC Section 21628, subd. (j)(B)(3))
Implementation of the System of Electronic Reporting of
Transactions by Secondhand Dealers and Pawnbrokers in
Tangible Personal Property - Payment of a Fee by Licensees
This bill:
1. Provides that on the date that DOJ implements the
statewide electronic reporting system for pawned or
secondhand tangible personal property, each secondhand
dealer, pawnbroker or coin dealer shall electronically
report applicable transactions, as specified.
2. Provides that for 30 days after implementation of the
electronic system, dealers shall continue to report on
paper forms.
3. Provides that DOJ shall charge all secondhand dealers
and pawnbrokers a fee for the operation of the
electronic reporting system.
4. Provides that the secondhand dealer licensing
authority - the sheriff, police chief or police
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commission as applicable - shall collect the electronic
system reporting fee and transmit the fee to DOJ.
5. Provides that the secondhand dealer licensing
authority may charge a fee to the applicant not to
exceed the actual costs incurred to process the
application and the collect and transmit the fee
charged by DOJ.
6. Provides that pawnbrokers shall comply with property
transaction reporting requirements imposed on
secondhand dealers.
7. Provides the following as to the calculation of the
electronic reporting system fee:
A. The fee shall be paid at the time the original
license is granted and when the license is renewed
every two years.
B. The fee shall be no more than $300 in any event.
C. The fee shall be no more than necessary to
reflect the costs of the following:
Processing of the initial application.
Processing renewal applications.
Implementing, operating and maintain the
statewide reporting system.
1. Provides that within 120 days of the effective date
of this bill, all license holders, as specified, shall
pay a fee not to exceed $288 to DOJ.
2. Establishes the Secondhand Dealer and Pawnbroker Fund
and shall, upon appropriation of the Legislature, to be
used by DOJ for implementation, operation, and
maintenance of the pawned and secondhand property
electronic reporting system.
3. Provides that any applicant for a secondhand dealer
or pawnbroker shall submit fingerprints and related
information required by DOJ for the purpose of
determining, pursuant to Penal Code Section 11105,
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subdivision (l), the applicant's criminal record,
including convictions and arrests. Arrest records
under this provision do not include charges resulting
in exoneration, or successful diversion, or deferred
entry of judgment proceedings.
4. Directs DOJ to provide subsequent arrest information
of the applicant to appropriate local government
licensing entities.
5. Provides that DOJ shall charge a fee sufficient to
cover the costs of the criminal record check process.
This bill states that the Legislature finds and declares
that secondhand dealers and pawnbrokers will receive a
clear benefit from the electronic reporting system.
Pawnbrokers and secondhand dealers are currently required
to report on paper forms approved or provided by DOJ and to
maintain specified records for five years. The current
requirements cost pawnbrokers and secondhand dealers
between $14,000 and $100,000 a month. The electronic
reporting system will eliminate the costly and risk-prone
paper form reporting system required of these businesses
under existing law and replace it with a more
cost-effective electronic reporting system.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time costs of $1.2 million (Special Fund) to the DOJ
in 2012-13 to develop the electronic reporting system, to
be offset through the collection of a combination of
fees, both from a new/renewal license fee of $300 and a
one-time fee of $288 imposed on pre-existing licensees.
The DOJ estimates $1,382,000 in fees will be collected
from an estimated 4,800 licensees statewide within 120
days of the bill's enactment. Additional time may be
required for sufficient funding to be available to
initiate development of the system to the extent there
are fewer licensees statewide.
Ongoing costs of $691,000 (Special Fund) in 2013-14 and
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thereafter to the DOJ to operate and maintain the
electronic reporting system, to be offset by biennial
license renewal fees and new license application fees of
$720,000 from an estimated 2,400 licensees in 2013-14 and
annually thereafter. To the extent there are fewer
new/renewed licensees and/or increased costs for ongoing
system operation and maintenance, annual costs in the
initial years of operation may not be fully covered by
fees.
Potential increase in the Proposition 98 minimum funding
guarantee in the range of $550,000 one-time and $288,000
(General Fund) ongoing should the increased revenues be
considered General Fund proceeds of taxes for purposes of
calculating the minimum school funding obligation.
Ongoing costs to the DOJ to process fingerprint images
for new licensees, to be fully offset by fees of $32 per
applicant (Fingerprint Fee Account).
Ongoing costs to local licensing authorities, to be
offset by fees authorized to be charged to applicants to
recover the actual costs of processing applications.
Clarifying language to include costs for the collection
and transmittal of license fees in the authorized fee is
recommended to ensure full cost recovery by licensing
agencies.
Some degree of economic stimulus resulting from cost
savings realized by affected businesses through
operational efficiencies gained by transitioning from the
paper reporting process to the electronic reporting
system.
SUPPORT : (Verified 6/7/12)
Office of the Attorney General (source)
Broadway Jewelry and Pawn
California Chamber of Commerce
California Coalition of Law Enforcement Associations
California Farm Bureau Federation
California Pawnbrokers Association
California Peace Officers Association
California State Sheriffs Association
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Capital City Loan and Jewelry
City of Bell Gardens Police Department, Chief Robert E.
Barnes
City of Fresno Police Department, Chief Jerry P. Dyer
City of Novato Police Department, Joseph M. Kreins
City of Sacramento Police Department, Chief Rick Braziel
City of Santa Ana Police Department, Chief Paul M. Walters
City of Santa Barbara Police Department, Chief Cam Sanchez
County of Los Angeles Sheriff Department, Sheriff Leroy D.
Baca
Los Angeles County Sheriff, Leroy Baca
National Federation of Independent Business
Peace Officers Research Association of California
Royal Loan
Sacramento County Sheriff, Scott Jones
San Diego County Police Chiefs & Sheriff's Association
San Diego Jewelry and Pawn
Southern California Alliance of Law Enforcement
Trader Stan's Pawn Shop
Westminster Jewelry and Loan
OPPOSITION : (Verified 6/7/12)
California Coin & Bullion Merchants Association (unless
amended)
California State Numismatic Association
ARGUMENTS IN SUPPORT : The California Farm Bureau
Federation states that this bill addresses the increasing
rates of metal theft in California. Farmers and ranchers
are doing what they can to protect their metal from theft,
however these materials must be kept outside so there are
limits to what theft deterrent methods our members can
employ. Actively providing scrap metal recycler records
through a streamlined electronic system to local law
enforcement is one method that will help reduce the
instances of metal theft. Providing consistent records
from scrap metal recyclers will help law enforcement
address the current metal theft epidemic facing
California's communities. Having records provided
regularly will save law enforcement time and allow for law
enforcement to easily recognize criminal patterns of metal
theft and subsequent recycling. Unfortunately the current
system needs improvement and AB 391 would create a
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statewide electronic system that would simplify the
reporting process and make records more easily accessible
for local law enforcement. In 2008, SB 447 (Maldonado) was
signed into law requiring junk dealers and recyclers to
report their scrap metal purchases to local law enforcement
in the same manner as required of secondhand dealers. AB
391, while targeted towards the reporting system for
secondhand dealers, will improve the reporting system for
junk dealers and recyclers in the process. Reducing and
eliminating rural crime is a high priority of the Farm
Bureau. California's farmers and ranchers compete in a
global marketplace and are unable to pass on increased
costs to consumers. Metal theft causes losses not just of
the actual metal but of the cost of repairing or replacing
the item from which the metal was stripped.
ARGUMENTS IN OPPOSITION : The California Coin & Bullion
Merchants Association (CCBMA) opposes this bill, unless
amended, and states that CCBMA has been involved in the
development of a statewide electronic transaction reporting
program since SB 1520 (Schiff) was enacted in 2000. While
the organization supports the creations of a statewide
program, they have steadfastly opposed the unfair funding
mechanism previously advanced by the pawnbrokers that is
incorporated in AB 391. In funding the creation and
maintenance of a statewide electronic reporting system,
CCBMA believes that the more a secondhand dealer uses the
system, the more he or she should pay for it. In its
present form AB 391 assesses a flat biennial fee of up to
$300 on every secondhand dealer, regardless of the number
of transactions the deal reports to the Attorney General.
A small mom-and-pop secondhand dealer who engages in ten
transactions per month would be assessed the same as
Capital City Loan and Jewelry in Sacramento which reports
28,000 transactions per month. They believe this is
unfair. The reporting systems should be supported by all
users in proportion to the amount they use. The biennial
$300 fee will force many small secondhand dealers either
out of business or into the underground economy. They
indicate the funding mechanism in AB 391 is the same one
advocated by the pawnbroker industry for more than a
decade. In its present form, AB 391 would force secondhand
dealers as an industry to pay the lion's share of the
development and maintenance costs of the electronic
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reporting system when, in fact, the system will be used
primarily by pawnbrokers. Instead of the biennial $300
fee, CCBMA requests an amendment to create a biennial $25
fee plus a twenty-five cent per transaction fee. That way,
both heavy users and occasional users will pay their fair
share.
RJG:n 6/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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