BILL ANALYSIS Ó AB 1325 Page 1 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 AB 1325 Page 2 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 Page 3 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 AB 1325 Page 4 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 Page 5 None on file Opposition None on file Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916) 319-3301