SB 526, as amended, Calderon. Commissioner of Corporations: lending practices: unlicensed activity report.
Existing law, the California Finance Lenders Law, provides for the licensure and regulation by the Commissioner of Corporations of licensees engaged in making consumer loans, as defined. Existing law requires these licensees to file an annual report with the commissioner concerning their business and operations. Existing law requires the commissioner to annually make and file with the department a composite of those annual reports. Existing law, the California Deferred Deposit Transaction Law, provides for the licensure and regulation by the Commissioner of Corporations of persons engaged in the business of originating or making deferred deposit transactions, as defined. Existing law requires a licensee to file an annual report with the commissioner. Existing law requires the commissioner to prepare an annual consolidated report based upon specified information received from licensees.
The Governor’s Reorganization Plan No. 2 of the 2011-12 Regular Session provides that, on and after July 1, 2013, the responsibilities of the Department of Corporations and the Commissioner of Corporations shall be transferred to the Department of Business Oversight and the Deputy Commissioner of Business Oversight for the Division of Corporations.
This bill would, on or before March 15 annually, require the commissioner to prepare a specified report on the lending and collection practices of unlicensed persons offering deferred deposit transactions or installment loans, or both, in amounts under $2,500, over the Internet, to persons in California, and on the enforcement actions taken by the commissioner against these persons. The bill would also require the commissioner to post on the department’s Internet Web site the company names and Internet Web site addresses of unlicensed lenders offering those deferred deposit transactions or installment loans without a license from the commissioner. The bill would also require the commissioner to accompany this posting with a consumer warning that alerts Californians to the unlicensed nature of the activities being conducted by these lenders.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Division 9.5 (commencing with Section 22900)
2is added to the Financial Code, to read:
3
(a) In addition to the reports required by Sections 22160
7and 23026, on or before March 15 of each year, the commissioner
8shall report on the lending and collection practices of unlicensed
9persons offering deferred deposit transactions or installment loans,
10or both, in amounts underbegin delete $2,500,end deletebegin insert two thousand five hundred
11dollars ($2,500),end insert over the Internet, to persons in California, and
12on the enforcement actions taken by the commissioner against
13these persons.
14(b) To the extent information is available, the
commissioner’s
15report shall include all of the following for the prior calendar year:
16(1) The number of unlicensed lenders identified by the
17commissioner as lending in California during the prior year, and
P3 1the company names and Internet Web site addresses these lenders
2used.
3(2) The state or country in which each of these Internet Web
4sites was hosted.
5(3) The rates and terms offered by these lenders.
6(4) The collection practices of these lenders.
7(5) The extent to which these lenders complied with the
8provisions of California law applicable to them.
9(6) The enforcement efforts taken against each of the unlicensed
10lenders identified by the commissioner during the prior year.
11(7) Recommendations for changes to law that would improve
12the department’s ability to identify and take enforcement actions
13against unlicensed persons lending in California over the Internet,
14and to minimize consumer harm resulting from such lending.
15(8) The differential impact, if any, that these deferred deposit
16transactions or installment loans, or both, have on low-income
17borrowers.
18(c) Based on the findings of the report prepared pursuant to this
19section, on the department’s Internet Web site, the commissioner
20
shall on an ongoing basis post the company names and Internet
21Web site addresses of unlicensed lenders offering deferred deposit
22transactions or installment loans, or both, in amounts underbegin delete $2,500,end delete
23begin insert two thousand five hundred dollars ($2,500),end insert over the Internet, to
24persons in California, without a required license from the
25commissioner to engage in those activities. The commissioner
26shall accompany this posting with a consumer warning that alerts
27Californians to the unlicensed nature of the activities being
28conducted by these lenders via these Internet Web sites.
29(d) For purposes of this section, the following definitions shall
30apply:
31(1) begin delete”Commissioner” end deletebegin insert“Commissioner” end insertshall mean the
32Commissioner of Corporations.
33(2) “Department” shall mean the Department of Corporations.
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