BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1325
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          Date of Hearing:   January 10, 2012

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER 
                                     PROTECTION
                                 Mary Hayashi, Chair
                    AB 1325 (Lara) - As Amended:  January 4, 2012
           
          SUBJECT  :   Business: fictitious business name statements.

           SUMMARY  :   Requires fictitious business name (FBN) statements to 
          contain language specifying that false declarations are a 
          misdemeanor punishable by a fine of up to $1,000, and requires 
          FBN statement registrants to provide specified personal 
          identification at the time of filing.  Specifically,  this bill  :  


          1)Requires a FBN statement to contain language that states, "A 
            registrant who declares as true any material matter pursuant 
            to Section 17913 of the Business and Professions Code that the 
            registrant knows to be false is guilty of a misdemeanor 
            punishable by a fine not to exceed one thousand dollars 
            ($1,000)."

          2)States that a FBN statement registrant who declares as true 
            any material matter pursuant to current law governing the 
            content of FBN statements that the registrant knows to be 
            false is guilty of a misdemeanor punishable by a fine not to 
            exceed one thousand dollars ($1,000).

          3)Requires, at the time of filing of the FBN statement, the 
            registrant to display a personal identification in the form of 
            a California driver's license or other identification 
            acceptable to the county clerk to adequately determine the 
            identity of the registrant.

          4)Deems the following forms of identification acceptable for 
            purposes of  3), above:

             a)   If the registrant is a corporation, its articles of 
               incorporation;

             b)   If the registrant is a limited liability company, its 
               certificate of organization; or,

             c)   If the registrant is a limited liability partnership, a 








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               limited liability partnership statement.

          5)Requires a registrant that mails a FBN statement to a county 
            clerk's office for filing to include the following, as 
            applicable:

             a)   A notarized certificate of identity statement, in the 
               case of a registrant other than a corporation of limited 
               liability company; or,

             b)   Its articles of incorporation or a notarized certificate 
               of identity statement, in the case of a corporation or 
               limited liability company.

          6)Specifies that, to constitute a filing, the FBN statement must 
            be signed by the registrant and accompanied by a display of a 
            personal identification in accordance with this bill.

           EXISTING LAW  

          1)Requires every person who regularly transacts business in 
            California for profit under a FBN to file and maintain a 
            current FBN statement.  

          2)Requires the FBN statement to contain specified information, 
            including language that states, "A registrant who declares as 
            true information which he or she knows to be false is guilty 
            of a crime."

          3)Requires a FBN statement to be published in a newspaper of 
            general circulation in the county in which the principal place 
            of business of the registrant is located, except as specified, 
            to be signed by specified individuals, and to be filed with 
            the county clerk where the business is located.

          4)Specifies that a registrant who declares as true any material 
            matter pursuant to current law governing the content of FBN 
            statements that he or she knows to be false is guilty of a 
            misdemeanor.

          5)Specifies the requirements for what constitutes filing of a 
            FBN statement, including presentation for filing of a FBN 
            statement, and one copy, tender of the filing fee, and 
            acceptance of the statement by the county clerk.









                                                                  AB 1325
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          6)States that any person who executes, files, or publishes any 
            FBN statement, knowing that such statement is false, in whole 
            or in part, shall be guilty of a misdemeanor and upon 
            conviction thereof shall be punished by a fine not to exceed 
            one thousand dollars ($1,000).

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author, "?current law 
          specifies the requirements for filing a FBN statement.  Current 
          law also specifies that it is a crime to knowingly provide false 
          information on the FBN application... Existing law, however, 
          does not require registrants to present a form of identification 
          to county clerk officials in order to verify that the 
          applicant's identity or business address matches the information 
          they submitted on the FBN form.  The deficiency in current law 
          leaves room for fraudulent activity whereby registrants use the 
          addresses of unsuspecting Californians to file a FBN Statement. 

          "This bill would strengthen consumer protections and curb FBN 
          identity theft by amending existing law to require applicants to 
          present proper identification at the time of filling for a FBN."

           Background  .  

          Current law requires every person who regularly transacts 
          business in California for profit under a FBN to file and 
          maintain a current FBN statement with the county clerk in which 
          the principal place of business is located.  This filing is 
          designed to protect consumers who deal with individuals or 
          partnerships that operate under FBNs by making available to the 
          public the identities of people or companies doing business 
          under a fictitious name.

          The use of a FBN can be advantageous for individuals and 
          corporations because it allows operation of a business or 
          multiple businesses at minimal cost, without having to use a 
          personal name or create an entirely new legal entity for each 
          business.

          Businesses must file the FBN statement, which is effective for 
          five years, within 40 days of their first transaction.  An 
          applicant may have more than one FBN and there may be more than 








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          one registrant per FBN.  All information on the FBN statement is 
          public record pursuant to the California Public Record Act, 
          including the residence address.

          According to a column published in the Los Angeles Times in 
          2010, an elderly resident of Los Angeles County discovered her 
          residential address had been used without her knowledge or 
          consent for several FBN statements when the Los Angeles County 
          Registrar-Recorder/County Clerk notified her of the 
          registrations.  Mail for the fictitious businesses and the 
          person who registered them began arriving at the home, which 
          prompted the resident to contact local government 
          representatives and file a complaint with the United States 
          Postal Service (USPS) and a report with the police.  The article 
          notes that a person might file such false statements in order to 
          lend legitimacy to fraudulent business activities, because a 
          search of a county registrar's website would yield the 
          registered FBNs.

          While current law sets out a variety of requirements for filing 
          FBN statements, it does not require registrants to provide 
          verifiable personal or corporate identification when doing so.  
          The statement also does not specify the penalty and fine for 
          providing false information.  This bill requires those who file 
          FBN statements to provide identification at the time of filing, 
          and requires the filing form to explicitly state that providing 
          false information on the form is a misdemeanor punishable by a 
          fine of up to $1,000.

           Previous legislation  .

          AB 1290 (Mendoza) of 2008 allows a county clerk, in the event 
          that the notice of pending expiration of a fictitious business 
          license is returned to the clerk by USPS as undeliverable, to 
          dispose of the returned notice without delay.  This bill was 
          vetoed.

          AB 1670 (Mendoza), Chapter 716, Statutes of 2007 revises the 
          conditions under which a new FBN must be filed and revises the 
          content of the FBN statement.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           








                                                                  AB 1325
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          None on file

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