BILL NUMBER: AB 424	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Eng

                        FEBRUARY 14, 2011

   An act to amend Sections 21200, 21200.5, 21201, and 21201.4 of,
and to add Section 21003 to, the Financial Code, relating to
pawnbrokers.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 424, as introduced, Eng. Pawnbrokers.
   Existing law regulates the sale and redemption of pledged property
by pawnbrokers. Existing law authorizes a pawnbroker to charge or
receive compensation at a rate not exceeding specified amounts based
upon the unpaid principal balance of the loan, but at least $3 per
month. Existing law also sets forth a schedule of charges applicable
to these loans and authorizes a pawnbroker to impose a charge of $1
on any loan for not more that 30 days which does not exceed $14.99.
Existing law requires loans made by pawnbrokers to be evidenced by a
written contract. Existing law requires a loan to which an original
loan debt is applied to be processed as a new loan. A knowing
violation of the provisions regulating pawnbrokers is a crime.
   This bill would define the term "month" for purposes of these
provisions to mean a period of time consisting of 30 consecutive
calendar days and would make various conforming changes. The bill
would specify that a pawnbroker may charge or receive compensation in
an amount of $3 per month when the sum of specified other charges or
compensation based upon the unpaid principal balance of a loan would
be less. The bill would authorize a pawnbroker to impose a charge of
$1 on any loan for not more than 3 months which does not exceed
$14.99. The bill would make other clarifying changes to these
provisions.
   Because a knowing violation of these provisions by a pawnbroker
would be a crime, this bill would impose a state-mandated local
program.
   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.  Section 21003 is added to the Financial Code, to read:
   21003.  For purposes of this division, the term "month" means a
period of time consisting of 30 consecutive calendar days.
  SEC. 2.  Section 21200 of the Financial Code is amended to read:
   21200.  (a) Except as otherwise provided in this chapter, no
pawnbroker shall charge or receive compensation at a rate exceeding
the sum of the following:
   (1) Two and one-half percent per month on that portion of the
unpaid principal balance of any loan up to, including, but not in
excess of two hundred twenty-five dollars ($225).
   (2) Two percent per month on that portion of the unpaid principal
balance of the loan in excess of two hundred twenty-five dollars
($225) up to, including, but not exceeding nine hundred dollars
($900).
   (3) One and one-half percent per month on that part of the unpaid
principal balance in excess of nine hundred dollars ($900) up to and
including, but not in excess of, one thousand six hundred fifty
dollars ($1,650).
   (4) One percent per month on any remainder of the unpaid principal
balance in excess of one thousand six hundred fifty dollars
($1,650). 
   (5) 
    (b)  A charge not exceeding three dollars ($3) a month
 on any loan when the monthly charge permitted by this
section would otherwise be less than that minimum charge 
 may   be charged by a pawnbroker in any month where the
sum of the rates set forth in subdivision (a) would otherwise be
less  . 
   (b) 
    (c)  One month's interest may be charged for any part of
the month in which pawned property is redeemed.
  SEC. 3.  Section 21200.5 of the Financial Code is amended to read:
   21200.5.  A pawnbroker may charge as prescribed in the following
schedule:


      Schedule of Charges


   (a) A charge not exceeding one dollar ($1)  per month for the
first three months  may be made on any loan  for not
more than 30 days  which does not exceed fourteen dollars
and ninety-nine cents ($14. 99).
   (b) A charge not exceeding three dollars ($3) may be made on any
loan for not more than  90 days   three months
 of fifteen dollars ($15) or more, but not exceeding nineteen
dollars and ninety-nine cents ($19.99).
   (c) A charge not exceeding four dollars ($4) may be made on any
loan for not more than  90 days   three months
 of twenty dollars ($20) or more, but not exceeding twenty-four
dollars and ninety-nine cents ($24.99).
   (d) A charge not exceeding five dollars ($5) may be made on any
loan for not more than  90 days   three months
 of twenty-five dollars ($25) or more, but not exceeding
thirty-nine dollars and ninety-nine cents ($39.99).
   (e) A charge not exceeding six dollars ($6) may be made on any
loan for not more than  90 days   three months
 of forty dollars ($40) or more, but not exceeding forty-nine
dollars and ninety-nine cents ($49.99).
   (f) A charge not exceeding seven dollars and fifty cents ($7.50)
may be made on any loan for not more than  90 days 
 three months  on any loan of fifty dollars ($50) or more,
but not exceeding sixty-four dollars and ninety-nine cents ($64.99).
   (g) A charge not exceeding eight dollars and fifty cents ($8.50)
may be made on any loan for not more than  90 days 
 three months  of sixty-five dollars ($65) or more, but not
exceeding seventy-four dollars and ninety-nine cents ($74.99).
   (h) A charge not exceeding ten dollars ($10) may be made on any
loan for not more than  90 days   three months
 of seventy-five dollars ($75) or more, but not exceeding
ninety-nine dollars and ninety-nine cents ($99.99).
   (i) A charge not exceeding twelve dollars and fifty cents ($12.50)
may be made on any loan for not more than  90 days 
 three months  of one hundred dollars ($100) or more, but
not exceeding one hundred twenty-four dollars and ninety-nine cents
($124.99).
   (j) A charge not exceeding thirteen dollars and fifty cents
($13.50) may be made on any loan for not more than  90 days
  three months  of one hundred twenty-five dollars
($125) or more, but not exceeding one hundred forty-nine dollars and
ninety-nine cents ($149.99).
   (k) A charge not exceeding fifteen dollars ($15) may be made on
any loan for not more than  90 days   three
months  of one hundred fifty dollars ($150) or more, but not
exceeding two hundred twenty-four dollars and ninety-nine cents
($224.99).
   (  l  ) A charge not exceeding twenty dollars ($20) may
be made on any loan for not more than  90 days  
three months  of two hundred twenty-five dollars ($225) or
more, but not exceeding three hundred twenty-four dollars and
ninety-nine cents ($324.99).
   (m) A charge not exceeding twenty-five dollars ($25) may be made
on any loan for not more than  90 days   three
months  of three hundred twenty-five dollars ($325) or more, but
not exceeding four hundred forty-nine dollars and ninety-nine cents
($449.99).
   (n) A charge not exceeding thirty-five dollars ($35) may be made
on any loan for not more than  90 days   three
months  of four hundred fifty dollars ($450) or more, but not
exceeding five hundred ninety-nine dollars and ninety-nine cents
($599.99).
   (o) A charge not exceeding forty-five dollars ($45) may be made on
any loan for not more than  90 days   three
months  of six hundred dollars ($600) or more, but not exceeding
seven hundred ninety-nine dollars and ninety-nine cents ($799.99).
   (p) A charge not exceeding fifty-five dollars ($55) may be made on
any loan for not more than  90 days   three
months  of eight hundred dollars ($800) or more, but not
exceeding nine hundred ninety-nine dollars and ninety-nine cents
($999.99).
   (q) A charge not exceeding seventy dollars ($70) may be made in
any loan for not more than  90 days   three
months  of one thousand dollars ($1,000) or more, but not
exceeding eleven hundred ninety-nine dollars and ninety-nine cents
($1,199.99).
   (r) A charge not exceeding eighty-five dollars ($85) may be made
on any loan for not more than  90 days   three
months  of twelve hundred dollars ($1,200) or more, but not
exceeding fourteen hundred ninety-nine dollars and ninety-nine cents
($1,499.99).
   (s) A charge not exceeding one hundred dollars ($100) may be made
on any loan for not more than  90 days   three
months  of fifteen hundred dollars ($1,500) or more, but not
exceeding seventeen hundred ninety-nine dollars and ninety-nine cents
($1,799.99).
   (t) A charge not exceeding one hundred twenty dollars ($120) may
be made on any loan for not more than  90 days  
three months  of eighteen hundred dollars ($1,800) or more, but
not exceeding two thousand ninety-nine dollars and ninety-nine cents
($2,099.99).
   (u) A charge not exceeding one hundred forty dollars ($140) may be
made on any loan for not more than  90 days  
three months  of twenty-one hundred dollars ($2,100) or more,
but not exceeding twenty-four hundred ninety-nine dollars and
ninety-nine cents ($2,499.99).
   (v) The  monthly  charge for any extension  or
renewal of a loan covered by this section   of a written
contract required by Section 21201 or 21201.5  shall be
computed in accordance with the provisions of Section 21200.
   The schedule of charges prescribed by this section shall be posted
in a place clearly visible to the general public.
  SEC. 4.  Section 21201 of the Financial Code is amended to read:
   21201.  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. The
loan contract shall provide a four-month loan period, shall set forth
the loan period and the date on which the loan is due and payable,
and shall clearly inform the borrower of his or her right to redeem
the pledge during the loan period.
   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 signature:

   "You may redeem the property you have pledged at any time until
the close of business on ____ fill in date 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 pawnbroker shall retain in his or her possession every
article pledged to him or her for a period of four months. During
such period the borrower may redeem the articles upon payment of the
amount of the loan and the applicable charges. If the borrower 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 the next calendar day when both the pawnbroker's store and
the storage facility are open, not to exceed two business days.
   If any pledged article is not redeemed during the four-month loan
period as provided herein, and the borrower and pawnbroker do not
mutually agree in writing to extend the loan period, the pawnbroker
shall notify the borrower within  30 days   one
month  after expiration of the loan period. If the pawnbroker
fails to notify the borrower within  30 days  
one month  after the expiration of the loan period, the
pawnbroker shall not charge interest from the day after the
expiration of the  30-day   one month 
period. The pawnbroker shall 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 extending the right of redemption,
during posted business hours, for a period of 10 days from date of
mailing of that notice. The 10-day notice shall include a statement
that: "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 posted schedule of charges required pursuant to
Section 21200.5 shall contain a notice informing the borrower 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
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
sale of pledged property is a misdemeanor pursuant to Section 21209.
  SEC. 5.  Section 21201.4 of the Financial Code is amended to read:
   21201.4.  Charges for the first  90 days  
three months  of any loan made pursuant to the written contract
required by Section 21201  or 21201.5  shall be determined
by the application of the schedule of charges contained in Section
21200.5. Charges for any  period   extension
 of time following the first  90 days  
three months  of  the   any  loan
shall be determined by application of the schedule of maximum
compensation contained in Section 21200.
  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.