BILL NUMBER: SB 300 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 26, 2015
INTRODUCED BY Senator Mendoza
FEBRUARY 23, 2015
An act to amend Sections 21201, 21201.5, and 21208 of, and to add
Section 21201.6 to, the Financial Code, relating to pawnbrokers.
LEGISLATIVE COUNSEL'S DIGEST
SB 300, as amended, 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. The bill would also
require that the contract be for a minimum of 4 months.
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.
requirements, including, but not limited to, that the pledgor
pay off all outstanding charges from the prior loan then due before a
replacement loan may be issued.
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:
SECTION 1. It is the intent of the Legislature to permit the
citizens of California the ability to transact pawn or collateral
loans in an efficient and expeditious manner wherever they may be
located. It is further the intent of the Legislature to permit such
loans to be made in conformity with the Uniform Electronic
Transactions Act, as set forth in Title 2.5 (commencing with Section
1633.1) of Part 2 of Division 3 of the Civil Code.
SEC. 2. Section 21201 of the Financial Code is amended to read:
21201. (a) 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 pledgor. The loan
contract shall provide a four-month loan period,
loan period that is a minimum of four months, shall set
forth the loan period and the date on which the loan is due and
payable, and shall clearly inform the pledgor of his or her right to
redeem the pledge during the loan period.
(b) Every 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 pledgor's signature:
"You may redeem the property you have pledged at any time until
the close of business on ____ fill in date no fewer than 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."
(c) Every 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 pledgor may redeem the articles upon payment of the
amount of the loan and the applicable charges. If the pledgor 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 consumer
pledgor the next calendar day when both the
pawnbroker's store and the storage facility are open, not to exceed
two business days.
(d) If any pledged article is not redeemed during the four-month
loan period as provided herein, and the pledgor and pawnbroker do not
mutually agree in writing to extend the loan period, the pawnbroker
shall notify the pledgor within one month after expiration of the
loan period. If the pawnbroker fails to notify the pledgor 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 pledgor at his or
her last known mailing or electronic address of the termination of
the loan period, 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, and extending the
right of redemption, during posted business hours, for a period of 10
days from date of mailing or electronic transmission of that notice.
The 10-day notice shall state, in substantially the same format as
the following: "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."
(e) However, the posted schedule of charges required pursuant to
Section 21200.5 shall contain a notice informing the pledgor 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.
(f) If 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.
(g) 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. The sale of pledged property is a
misdemeanor pursuant to Section 21209.
SEC. 3. Section 21201.5 of the Financial Code is amended to read:
21201.5. (a) During the contractual loan period and any extension
thereof, but prior to the start of the 10-day grace period
provided in subdivision (d) of Section 21201, a pledgor may
request, and a pawnbroker may consent to, a replacement loan to take
effect upon the expiration of the loan period stated in the active
loan contract delivered to the pledgor under Section 21201 or this
section.
(b) A Alternatively, a pledgor may
request, and a pawnbroker may consent to, a replacement loan
may also issue upon the request of the pledgor and the
consent of the pawnbroker prior to the expiration of the grace period
provided by Section 21201. This during the 10-day
grace period provided in subdivision (d) of Section 21201. Any such
replacement loan shall become effective on the date it is
issued.
(c) All of the following shall apply to a replacement loan issued
pursuant to this section:
(1) The loan shall be processed as, and deemed to be, a new loan
subject to all other fees and charges permitted by this chapter.
(2) The pledgor's consent to the terms of any replacement loan
shall be deemed given when he or she executes the written replacement
loan in person or electronically in conformity with the provisions
of Section 21201.6, and pays in cash or another form acceptable to
the pawnbroker all of the charges and interest due under the prior
loan or if all of the following conditions are met:
(A) The pledgor pays off all outstanding charges from the prior
loan then due, including interest, and any loan writing, storage,
notification, or other fee authorized in this chapter in cash or
another form acceptable to the pawnbroker. The pledgor's payment may
be delivered to the pawnbroker by any method, including, but not
limited to, United States mail, private mail, a personal
representative, or electronic transfer, provided that manner of
payment is acceptable to the pawnbroker. If insufficient payment is
tendered by the pledgor or is tendered in a form unacceptable to the
pawnbroker, the pawnbroker shall, if commercially reasonable, return
the payment in the same manner that the payment was delivered by the
pledgor or by another commercially reasonable manner within five
business days and shall include a statement advising the pledgor the
reason the payment was rejected. The pawnbroker is under no
obligation to enter into a replacement loan if the amount is
insufficient or the form of payment or method of tender is
unacceptable to the pawnbroker.
(B) If the replacement loan is executed other than pursuant to
Section 21201.6, the principal amount of the replacement loan is
equal to or less than the principal amount of the prior loan.
(C) The terms of the replacement loan are consistent with this
chapter on the date the replacement loan is issued.
(D) The replacement loan is evidenced by a written agreement or
electronic record and a paper or electronic copy is mailed or
otherwise transmitted to the pledgor within five business days
following receipt of payment by the pawnbroker by a means for which
verification of mailing or transmittal can be provided by the
pawnbroker.
(3) The unpaid balance of the prior loan shall be debited to the
replacement loan on which the same article or articles have been
pledged. The replacement loan shall disclose the amount of the prior
loan that is debited and shall otherwise be consistent with Section
21201.
(2) Before a replacement loan may be issued, the pledgor shall pay
off all outstanding charges from the prior loan then due, including
interest or any loan writing, storage, notification, or other fee
authorized in this chapter, in cash or another form acceptable to the
pawnbroker. The pledgor's payment may be delivered to the pawnbroker
by any method, including, but not limited to, United States mail,
private mail, a personal representative, or electronic transfer,
provided that the manner of payment is acceptable to the pawnbroker.
If insufficient payment is tendered by the pledgor or is tendered in
a form unacceptable to the pawnbroker, the pawnbroker shall, if
commercially reasonable, return the payment in the same manner that
the payment was delivered by the pledgor, or by another commercially
reasonable manner, within five business days, and shall include a
statement advising the pledgor the reason the payment was rejected.
The pawnbroker is under no obligation to enter into a replacement
loan if the amount is insufficient or the form of payment or method
of tender is unacceptable to the pawnbroker.
(3) The unpaid balance of the prior loan shall be debited to the
replacement loan on which the same article or articles have been
pledged. The replacement loan contract shall disclose the amount of
the prior loan that is debited and shall otherwise be consistent with
Section 21201.
(4) If the pledgor requests a replacement loan in person or
electronically, the pledgor's consent to the terms of the replacement
loan shall be deemed given when he or she signs the written
replacement loan contract in person or electronically in conformity
with Section 21201.6.
(5) If the pledgor requests a replacement loan by mail or through
a personal representative, the pledgor's consent to the terms of the
replacement loan shall be deemed given when all required charges from
the prior loan then due are paid in a form acceptable to the
pawnbroker. The principal amount of a replacement loan requested by
mail or through a personal representative shall not exceed the
principal amount of the prior loan.
(6) The terms of the replacement loan shall be consistent with
this chapter on the date the replacement loan is issued.
(7) The replacement loan shall be evidenced by a written agreement
or electronic record. The pawnbroker shall mail or otherwise
transmit a copy of the written agreement or electronic record to the
pledgor within five business days following receipt of payment by
means for which verification of mailing or electronic transmittal can
be provided by the pawnbroker.
SEC. 4. Section 21201.6 is added to the Financial Code, to read:
21201.6. The requirement for a written contract signed by the
pledgor as set forth in Sections 21201 and 21201.5 may be met
electronically if all of the following conditions are satisfied:
(a) The contract and transaction comply with the provisions of the
Uniform Electronic Transactions Act, as set forth in Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, as may be applicable at the time that the loan is entered into
between the pawnbroker and the pledgor.
(b) Any written disclosures specified in this chapter to be set
forth in a specified minimum font type
size are conspicuously presented to the pledgor prior to his or her
execution of the electronic contract.
(c) The pawnbroker makes one of the following disclosures:
(1) If the principal loan amount is below two thousand five
hundred dollars ($2,500), the pawnbroker discloses the maximum
compensation due a pawnbroker as set forth in Section 21200.7 prior
to the pledgor's execution of the electronic agreement.
contract.
(2) If the principal loan amount is two thousand five hundred
dollars ($2,500) or more, the pawnbroker discloses the provisions of
Sections 21051 and 22054 prior to the pledgor's execution of the
electronic agreement. contract.
SEC. 5. Section 21208 of the Financial Code is amended to read:
21208. (a) Except as provided in subdivision (b), a pawnbroker
shall comply with the reporting requirements imposed on secondhand
dealers under Article 4 (commencing with Section 21625) of Chapter 9
of Division 8 of the Business and Professions Code.
(b) A pawnbroker who has issued a loan electronically pursuant to
Section 21201.6 shall, in lieu of obtaining and reporting the
customer's fingerprint as set forth in subdivision (g) of Section
21628 of the Business and Professions Code, electronically deposit
the loan proceeds into a deposit account held in the name of the
pledgor at a bank, savings and loan, or credit union
depository institution located in the United
States.
SEC. 6. 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.