SB 300, as introduced, Mendoza. Pawnbrokers: regulations.
Existing law regulates pawnbrokers and requires a written contract for every loan by a pawnbroker for which goods are received in pledge as security, as specified, and requires a copy of that contract to be furnished to the borrower.
This bill would permit the requirement for a written contract to be met electronically, provided that the contract and transaction comply with the provisions of the Uniform Electronic Transactions Act and meet certain disclosure requirements.
Existing law requires a pawnbroker, within one month after the loan period expires, 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.
Existing law permits a pledgor and a pawnbroker to agree to a new loan to become effective at the end of the loan period and requires the new loan to be processed as a new loan subject to loan origination, storage, and other fees as specified.
This bill would permit a replacement loan to be issued at the request of the pledgor with consent of the pawnbroker before the expiration of the redemption period, to become effective on the date it is issued, subject to specified procedures.
Existing law requires a pawnbroker to comply with the reporting requirements imposed on secondhand dealers, including the requirement to obtain and report the customer’s fingerprint.
This bill would require a pawnbroker who has issued a loan electronically, instead of obtaining and reporting the customer’s fingerprint, to electronically deposit the loan proceeds into a deposit account held in the name of the pledgor, as specified.
Because a knowing violation of these provisions 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:
It is the intent of the Legislature to permit the
2citizens of California the ability to transact pawn or collateral loans
3in an efficient and expeditious manner wherever they may be
4located. It is further the intent of the Legislature to permit such
5loans to be made in conformity with the Uniform Electronic
6Transactions Act, as set forth in Title 2.5 (commencing with
7Section 1633.1) of Part 2 of Division 3 of the Civil Code.
Section 21201 of the Financial Code is amended to
Every loan made by a pawnbroker for which goods
11are received in pledge as security shall be evidenced by a written
12contract, a copy of which shall be furnished to the
begin delete borrower.end delete
13 The loan contract shall provide a four-month loan period,
14shall set forth the loan period and the date on which the loan is
P3 1due and payable, and shall clearly inform the
begin delete borrowerend delete of
2his or her right to redeem the pledge during the loan period.
3 Everyend delete
4 loan contract shall contain the following notice, in at
5least 8-point boldface type and circumscribed by a box,
6immediately above the space for the
begin delete borrower’send delete
8“You may redeem the property you have pledged at any time
9 until the close of business on ____ [fill in date four
10months from date loan begins]. To redeem, you must pay the
11amount of the loan and the applicable charges which have accrued
12through the date on which you redeem.”
13 Everyend delete
14 pawnbroker shall retain in his or her possession every
15article pledged to him or her for a period of four months. During
16such period the
begin delete borrowerend delete may redeem the articles upon
17payment of the amount of the loan and the applicable charges. If
begin delete borrowerend delete and the pawnbroker agree in writing that the
19pawned property may be stored off premises, following the request
20for redemption of the loan, the pawnbroker shall return the pledged
21property to the consumer the next calendar day when both the
22pawnbroker’s store and the storage facility are open, not to exceed
23two business days.
24 Ifend delete
25 any pledged article is not redeemed during the four-month
26loan period as provided herein, and the
begin delete borrowerend delete and
27pawnbroker do not mutually agree in writing to extend the loan
28period, the pawnbroker shall notify the
begin delete borrowerend delete within
29one month after expiration of the loan period. If the pawnbroker
30fails to notify the
begin delete borrowerend delete within one month after the
31expiration of the loan period, the pawnbroker shall not charge
32interest from the day after the expiration of the one-month period.
33The pawnbroker shall notify the
begin delete borrowerend delete at his or her
34last known address of the termination of the
35loan period, by a means for which verification of mailing
begin delete or of the notification can be provided by the pawnbroker,
38and extending the right of redemption, during posted business
39hours, for a period of 10 days from date of mailing of that notice. The 10-day notice shall
begin delete include a
“If the tenth day falls on a day when the pawnshop is
P4 1statement that:end delete
3closed, the time period is extended to the next day that the
4pawnshop is open.”
5 However,end delete
6 the posted schedule of charges required pursuant
7to Section 21200.5 shall contain a notice informing the
begin delete borrowerend delete
8 that if he or she desires, the pawnbroker shall send the
9notice of termination of the loan period by registered or certified
10mail with return receipt requested, upon prepayment of the mailing
begin delete Ifend delete
12 any pledged article is not redeemed within the 10-day
13notice period, the pawnbroker shall become vested with all right,
14title, and interest of the pledgor, or his or her assigns, to the pledged
15article, to hold and dispose of as his or her own property. Any
16other provision of law relating to the foreclosure and sale of
17pledges shall not be applicable to any pledge the title to which is
18transferred in accordance with this section.
begin delete Theend delete
19 pawnbroker shall not sell any article of pledged property
20until he or she has become vested with the title to that property
21pursuant to this section. The sale of pledged property is a
22misdemeanor pursuant to Section 21209.
Section 21201.5 of the Financial Code is amended to
begin deleteA end deletepledgor may request, and a pawnbroker may
27consent to, a
begin delete newend delete loan to take effect upon begin delete or at any
the expiration of the loan period stated in the
28time afterend delete
begin delete originalend delete
29 loan contract delivered to the pledgor under Section 21201
begin delete The pledgor shall pay in cash or another form
31acceptable to the pawnbroker all of the charges and interest due
32under the original loan, and the remaining unpaid balance of the
33actual amount borrowed under the original loan shall be debited
34to the new loan on which the same article or articles are pledged.
35The loan to which the debit is applied shall be processed as a new
36loan and shall be deemed to be a new loan subject to loan
37origination fees, storage fees, and other fees permitted by this
38chapter, when applicable. The new loan contract required by
39Section 21201 shall disclose the amount of the original loan that
40is debited to the new loan.end delete
Section 21201.6 is added to the Financial Code, to
The requirement for a written contract signed by the
12pledgor as set forth in Sections 21201 and 21201.5 may be met
13electronically if all of the following conditions are satisfied:
14(a) The contract and transaction comply with the provisions of
15the Uniform Electronic Transactions Act, as set forth in Title 2.5
16(commencing with Section 1633.1) of Part 2 of Division 3 of the
17Civil Code, as may be applicable at the time that the loan is entered
18into between the pawnbroker and the pledgor.
19(b) Any written disclosures specified in this chapter to be set
20forth in a specified minimum font size are conspicuously presented
21to the pledgor prior to his or her execution of the electronic
23(c) The pawnbroker makes one of the following disclosures:
24(1) If the principal loan amount is below two thousand five
25hundred dollars ($2,500), the pawnbroker discloses the maximum
26compensation due a pawnbroker as set forth in Section 21200.7
27prior to the pledgor’s execution of the electronic agreement.
28(2) If the principal loan amount is two thousand five hundred
29dollars ($2,500) or more, the pawnbroker discloses the provisions
30of Sections 21051 and 22054 prior to the pledgor’s execution of
31the electronic agreement.
Section 21208 of the Financial Code is amended to
begin deleteA end delete
35pawnbroker shall comply with the reporting requirements imposed
36on secondhand dealers under Article 4 (commencing with Section
3721625) of Chapter 9 of Division 8 of the Business and Professions
No reimbursement is required by this act pursuant to
7Section 6 of Article XIII B of the California Constitution because
8the only costs that may be incurred by a local agency or school
9district will be incurred because this act creates a new crime or
10infraction, eliminates a crime or infraction, or changes the penalty
11for a crime or infraction, within the meaning of Section 17556 of
12the Government Code, or changes the definition of a crime within
13the meaning of Section 6 of Article XIII B of the California