BILL ANALYSIS Ó
AB 2209
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Date of Hearing: May 14, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2209 (Dickinson) - As Amended: May 5, 2014
Policy Committee: Banking &
FinanceVote: 11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes several technical changes and a few substantive
changes to the Money Transmission Act (MTA). The substantive
changes consist of:
1)Amends the definition of "money transmission" to, in effect,
exempt the activity of online marketplaces that facilitate
transactions between consumers and third party merchants (for
example, Amazon) from being considered money transmission.
2)Amendments to various requirements with respect to notices and
receipts that currently contemplate face-to-face transactions
to accommodate vendors that transact through internet websites
and mobile applications.
3)Clarification that guidance offered by the commissioner to
prospective applicants regarding licensing requirements is
informal and only based on the information actually provided
by the applicant concerning its plan to do business.
FISCAL EFFECT
Minor and absorbable costs to the Department of Business
Oversight.
COMMENTS
1) Purpose. According to the author, the proliferation of mobile
payment apps and online platforms that collect and hold
consumer financial data has raised a number of key policy
issues. Lessons learned from the implementation of AB 786
AB 2209
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(Dickinson), Chapter 533, Statutes of 2013, as well as
oversight hearings on this issue informed the changes proposed
in this bill. AB 2209 provides for further clarification to
the MTA through updating and revising its application as it
relates to emerging electronic payment platforms.
2) Background. AB 786 originated out of an Assembly Banking and
Finance oversight hearing on March 11, 2013 titled Emerging
Technology and the Money Transmission Act as well as
subsequent research on growing technological changes in the
payments and money transmission industries. AB 786 made
numerous changes to the MTA to accommodate new technologies in
a changing marketplace while minimizing barriers to entry for
new money transmission businesses.
The advent of mobile applications to transmit money to
purchase goods or services gave rise to several grey areas in
the application of the MTA, particularly as the definition of
"money transmission" is circular and open to broad
interpretation. At present, any movement of money from one
party to another party while using a third party intermediary
could potentially be interpreted as "money transmission" under
the statute.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081