Senate Bill No. 285

Introduced by Senator Block

(Coauthors: Senators Galgiani and Vidak)

(Coauthor: Assembly Member Maienschein)

February 19, 2015

An act to amend Sections 21200, 21200.1, 21200.5, 21200.6, 21201, and 21201.2 of the Financial Code, relating to pawnbrokers.

LEGISLATIVE COUNSEL’S DIGEST

SB 285, as introduced, Block. Pawnbrokers: compensation: loans.

Existing law regulates pawnbrokers and sets the maximum compensation charged or received by pawnbrokers on loans to their customers. A knowing violation of the provisions regulating pawnbrokers is a crime.

Existing law provides a schedule of maximum charges for 21 loan brackets for the first 3 months of any loan.

This bill, in that schedule, would consolidate the 21 loan brackets into 6 and set maximum charges within those brackets.

Existing law, among other things, limits the charge for the 4th and subsequent months of a loan to 2.5% per month on the unpaid balance, as specified.

This bill would increase the charge limit for the 4th and subsequent months to 3% per month.

Existing law permits a loan setup fee of the greater of $5 or 2% of the loan amount, not to exceed $10.

This bill would adjust the permitted loan setup fee to the greater of either $5 or 3% of the loan amount, not to exceed $30.

Existing law permits a pawnbroker to collect a handling and storage charge for certain pawned articles at the time property is redeemed. Existing law establishes the maximum amount, irrespective of the duration of the loan, that may be charged based on size of pawned articles, as specified, and prohibits a storage charge for any article that can be contained within one cubic foot.

This bill would instead provide that a pawnbroker may include the handling and storage charge when the pawnbroker issues a loan or any subsequent loan, as specified. This bill would permit a pawnbroker to additionally charge a maximum of $1 for handling and storage of any article that can be contained within one cubic foot.

Existing law requires a pawnbroker to 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 provides for extending the right of redemption for a period of 10 days from the date that notice is mailed.

This bill would instead require the pawnbroker to provide that notification to the pledgor at his or her last known mailing or electronic address, by a means for which verification of mailing or, at the sole option of the pledgor, electronic transmission of the notification can be provided by the pawnbroker, as specified.

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 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)  begin delete Two and one-half end delete begin insert Three end insert percent per month on the unpaid
principal balance of any loan.

(2) A charge not exceeding three dollars ($3) a month on any
loan when the monthly charge permitted by paragraph (1) would
otherwise be less.

(b) One month’s interest may be charged for any part of the
month in which pawned property is redeemed.

SEC. 2.  

Section 21200.1 of the Financial Code is amended to
read:

21200.1.  

A loan setup fee begin delete not to exceed end delete begin insert of end insert five dollars ($5) or
begin delete 2 end delete begin insert 3 end insert percent, whichever is greater, may be charged for each loan.
However, the maximum loan setup fee shall not exceed begin delete ten dollars
($10) end delete begin insert thirty dollars ($30) end insert . Loan setup fees are in addition to any
other allowed charges.

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 begin delete one dollar ($1) per month for the
first three months may be made on any loan end delete begin insert three dollars ($3) may
be made on any loan for not more than three months end insert which does
not exceed begin delete fourteen end delete begin insert nineteen end insert dollars and ninety-nine cents begin delete ($14.
99) end delete begin insert ($19.99) end insert .

(b) A charge not exceeding begin delete three dollars ($3) end delete begin insert six dollars ($6) end insert
may be made on any loan for not more than three months of begin delete fifteen
dollars ($15) end delete begin insert twenty dollars ($20) end insert or more, but not exceeding
begin delete nineteen end delete begin insert forty-nine end insert dollars and ninety-nine cents begin delete ($19.99) end delete begin insert ($49.99) end insert .

(c) A charge not exceeding begin delete four dollars ($4) end delete begin insert nine dollars ($9) end insert
may be made on any loan for not more than three months of begin delete twenty
dollars ($20) end delete begin insert fifty dollars ($50) end insert or more, but not exceeding
begin delete twenty-four end delete begin insert seventy-four end insert dollars and ninety-nine cents begin delete ($24.99) end delete
begin insert ($74.99) end insert .

(d) A charge not exceeding begin delete five dollars ($5) end delete begin insert twelve dollars ($12) end insert
may be made on any loan for not more than three months of
begin delete twenty-five dollars ($25) end delete begin insert seventy-five dollars ($75) end insert or more, but
not exceeding begin delete thirty-nine end delete begin insert ninety-nine end insert dollars and ninety-nine cents
begin delete ($39.99) end delete begin insert ($99.99) end insert .

(e) A charge not exceeding begin delete six dollars ($6) end delete begin insert fifteen dollars ($15) end insert
may be made on any loan for not more than three months of begin delete forty
dollars ($40) end delete begin insert one hundred dollars ($100) end insert or more, but not
exceeding begin delete forty-nine end delete begin insert one hundred seventy-four end insert dollars and
ninety-nine cents begin delete ($49.99) end delete begin insert ($174.99) end insert .

(f) A charge not exceeding begin delete seven dollars and fifty cents ($7.50) end delete
begin insert 9 end insert begin insert percent end insert may be made on any loan for not more than three months
on any loan of begin delete fifty dollars ($50) end delete begin insert one hundred seventy-five dollars
($175) end insert or more, but not exceeding begin delete sixty-four end delete begin insert two thousand four
hundred ninety-nine end insert dollars and ninety-nine cents begin delete ($64.99) end delete
begin insert ($2,499.99) end insert .

begin delete

(g) A charge not exceeding eight dollars and fifty cents ($8.50)
may be made on any loan for not more than 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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).

end delete begin delete

(v)

end delete

begin insert (g) end insert  The monthly charge for any extension of a written contract
required by Section 21201 or 21201.5 shall be computed in
accordance with the provisions of Section 21200.

begin delete

The

end delete

begin insert (h) end insert begin insert   end insert begin insert The end insert schedule of charges prescribed by this section shall be
posted in a place clearly visible to the general public.

SEC. 4.  

Section 21200.6 of the Financial Code is amended to
read:

21200.6.  

(a) In addition to other allowed charges, begin delete at the time
property is redeemed end delete begin insert when end insert a pawnbroker begin insert issues a loan or any
subsequent loan as permitted by Section 21201.5, the pawnbroker end insert
may begin delete collect end delete begin insert include end insert a handling and storage charge for begin delete certain end delete
pawned articles. begin delete Irrespective of the duration of the loan, end delete begin insert For any
loan issued pursuant to Section 21201 or subsequent loan issued
pursuant to Section 21201.5, end insert the maximum amount that may be
charged pursuant to this section is in accordance with the following
schedule:

begin insert

(1) One dollar ($1) for any article that can be contained within
one cubic foot.

end insert begin delete

(1)

end delete

begin insert (2) end insert  Five dollars ($5) for any article that cannot be contained
within one cubic foot begin insert but can be contained within three cubic feet end insert .

begin delete

(2)

end delete

begin insert (3) end insert  Ten dollars ($10) for any article that cannot be contained
within three cubic feet begin insert but can be contained within six cubic feet end insert .

begin delete

(3)

end delete

begin insert (4) end insert  Twenty dollars ($20) for any article that cannot be contained
within six cubic feet and one dollar ($1) for each additional cubic
foot in excess of six cubic feet.

begin delete

(b) No storage charge is allowed for any article that can be
contained within one cubic foot.

end delete begin delete

(c)

end delete

begin insert (b) end insert  For purposes of this section, cubic feet shall be determined
by multiplying the width of an article, at its greatest width, by the
depth of an article, at its greatest depth, by the height of an article,
at its greatest height.

SEC. 5.  

Section 21201 of the Financial Code is amended to
read:

21201.  

begin insert (a) end insert begin insert   end insert 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 begin delete borrower end delete
begin insert pledgor end insert . 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 begin delete borrower end delete begin insert pledgor end insert of
his or her right to redeem the pledge during the loan period.

begin delete

Every

end delete

begin insert (b) end insert begin insert   end insert begin insert Every end insert 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 begin delete borrower’s end delete begin insert pledgor’s end insert
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.”

begin delete

Every

end delete

begin insert (c) end insert begin insert   end insert begin insert Every end insert 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 begin delete borrower end delete begin insert pledgor end insert may redeem the articles upon
payment of the amount of the loan and the applicable charges. If
the begin delete borrower end delete begin insert pledgor end insert 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 begin delete consumer end delete begin insert pledgor end insert the next calendar day when both
the pawnbroker’s store and the storage facility are open, not to
exceed two business days.

begin delete

If

end delete

begin insert (d) end insert begin insert   end insert begin insert If end insert any pledged article is not redeemed during the four-month
loan period as provided herein, and the begin delete borrower end delete begin insert pledgor end insert and
pawnbroker do not mutually agree in writing to extend the loan
period, the pawnbroker shall notify the begin delete borrower end delete begin insert pledgor end insert within
one month after expiration of the loan period. If the pawnbroker
fails to notify the begin delete borrower end delete begin insert pledgor end insert within one month after the
expiration of the loan period, the pawnbroker shall not charge
interest from the day after the expiration of the one-month period.
The pawnbroker shall notify the begin delete borrower end delete begin insert pledgor end insert at his or her
last known begin insert mailing or electronic end insert address of the termination of the
loan period, by a means for which verification of mailing begin delete or
delivery end delete begin insert or, at the sole option of the pledg end insert begin insert or, electronic
transmission end insert 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 begin insert or electronic
transmission end insert of that notice. The 10-day notice shall begin delete include a
statement that: end delete begin insert state, in substantially the same format as the
following: end insert “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.”

begin delete

However, the

end delete

begin insert (e) end insert begin insert   end insert begin insert The end insert posted schedule of charges required pursuant to Section
21200.5 shall contain a notice informing the begin delete borrower end delete begin insert pledgor end insert 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. begin delete If end delete

begin insert (f) end insert begin insert   end insert begin insert If end insert 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. begin delete The end delete

begin insert (g) end insert begin insert   end insert begin insert The end insert sale of pledged property is a misdemeanor pursuant to
Section 21209.

SEC. 6.  

Section 21201.2 of the Financial Code is amended to
read:

21201.2.  

If the pledgor fails to redeem any pawned item during
the loan period, thereby obliging the pawnbroker to mail begin insert or
electronically transmit end insert the notice required under Section 21201,
the pawnbroker may charge a fee of up to three dollars ($3) for
services and costs pertaining to the preparation of the notice, in
addition to any other allowed charges.

SEC. 7.  

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.