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 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:
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
(a) Every loan made by a pawnbroker for which goods
4are received in pledge as security shall be evidenced by a written
5contract, a copy of which shall be furnished to the pledgor. The
6loan contract shall provide a loan period that is a minimum of four
7months, shall set forth the loan period and the date on which the
8loan is due and payable, and shall clearly inform the pledgor of
9his or her right to redeem the pledge during the loan period.
10(b) Every loan contract shall contain the following notice, in at
11least 8-point boldface type and circumscribed by a box,
12immediately above the space for the pledgor’s signature:
13“You may redeem the
property you have pledged at any time
14 until the close of business on ____ [fill in date no fewer than four
15months from date loan begins]. To redeem, you must pay the
16amount of the loan and the applicable charges which have accrued
17through the date on which you redeem.”
18(c) Every pawnbroker shall retain in his or her possession every
19article pledged to him or her for a period of four months. During
20such period the pledgor may redeem the articles upon payment of
21the amount of the loan and the applicable charges. If the pledgor
22and the pawnbroker agree in writing that the pawned property may
23be stored off premises, following the request for redemption of
24the loan, the pawnbroker shall return the pledged property to the
25 pledgor the next calendar day when both the pawnbroker’s store
26and the storage facility are open, not to exceed two business days.
27(d) If any pledged article is not redeemed during the four-month
28loan period as provided herein, and the pledgor and pawnbroker
29do not mutually agree in writing to extend the loan period, the
30pawnbroker shall notify the pledgor within one month after
31expiration of the loan period. If the pawnbroker fails to notify the
32pledgor within one month after the expiration of the loan period,
33the pawnbroker shall not charge interest from the day after the
34expiration of the one-month period. The pawnbroker shall notify
35the pledgor at his or her last known mailing or electronic address
36of the termination of the loan period, by a means for which
37verification of mailing or, at the sole option of the pledgor,
38electronic transmission of the notification can be provided by the
39pawnbroker, and extending the right of redemption, during posted
40business hours, for a period of 10 days from date of mailing or
P4 1electronic transmission of that notice. The 10-day notice shall state,
2in substantially the same format as the following: “If the tenth day
3falls on a day when the pawnshop is closed, the time period is
4extended to the next day that the pawnshop is open.”
9(e) However, the posted schedule of charges required pursuant
10to Section 21200.5 shall contain a notice informing the pledgor
11that if he or she desires, the pawnbroker shall send the notice of
12termination of the loan period by registered or certified mail with
13return receipt requested, upon prepayment of the mailing costs.
14(f) If any pledged article is not redeemed within the 10-day
15notice period, the pawnbroker shall become vested with all right,
16title, and interest of the pledgor, or his or her assigns, to the pledged
17article, to hold and dispose of as his or her own property. Any
18other provision of law relating to the foreclosure and sale of
19pledges shall not be applicable to any pledge the title to which is
20transferred in accordance with this section.
21(g) The pawnbroker shall not sell any article of pledged property
22until he or she has become vested with the title to that property
23pursuant to this section. The sale of pledged property is a
24misdemeanor pursuant to Section 21209.
Section 21201.5 of the Financial Code is amended to
(a) During the contractual loan period and any
28extension thereof, but prior to the start of the 10-day grace period
29provided in subdivision (d) of Section 21201, a pledgor may
30request, and a pawnbroker may consent to, a replacement loan to
31take effect upon the expiration of the loan period stated in the
32active loan contract delivered to the pledgor under Section 21201
33or this section.
34(b) Alternatively, a pledgor may request, and a pawnbroker may
35consent to, a replacement loan during the 10-day grace period
36provided in subdivision (d) of Section 21201. Any such
37replacement loan shall become effective on the date it is issued.
38(c) All of the following shall apply to a replacement loan issued
39pursuant to this section:
P5 1(1) The loan shall be processed as, and deemed to be, a new
2loan subject to all other fees and charges permitted by this chapter.
3(2) Before a replacement loan may be issued, the pledgor shall
4pay off all outstanding charges from the prior loan then due,
5including interest or any loan writing, storage, notification, or other
6fee authorized in this chapter, in cash or another form acceptable
7to the pawnbroker. The pledgor’s payment may be delivered to
8the pawnbroker by any method, including, but not limited to,
9United States mail, private mail, a personal representative, or
10electronic transfer, provided that the manner of payment is
11acceptable to the pawnbroker. If insufficient payment is tendered
12by the pledgor or is tendered in a form unacceptable to the
13pawnbroker, the pawnbroker shall, if commercially reasonable,
14return the payment in the same manner that the payment was
15delivered by the pledgor, or by another commercially reasonable
16manner, within five business days, and shall include a statement
17advising the pledgor the reason the payment was rejected. The
18pawnbroker is under no obligation to enter into a replacement loan
19if the amount is insufficient or the form of payment or method of
20 tender is unacceptable to the pawnbroker.
21(3) The unpaid balance of the prior loan shall be debited to the
22replacement loan on which the same article or articles have been
23pledged. The replacement loan contract shall disclose the amount
24of the prior loan that is debited and shall otherwise be consistent
25with Section 21201.
26(4) If the pledgor requests a replacement loan in person or
27electronically, the pledgor’s consent to the terms of the replacement
28loan shall be deemed given when he or she signs the written
29replacement loan contract in person or electronically in conformity
30with Section 21201.6.
31(5) If the pledgor requests a replacement loan by mail or through
32a personal representative, the pledgor’s consent to the terms of the
33replacement loan shall be deemed given when all required charges
34from the prior loan then due are paid in a form acceptable to the
35pawnbroker. The principal amount of a replacement loan requested
36by mail or through a personal representative shall not exceed the
37principal amount of the prior loan.
38(6) The terms of the replacement loan shall be consistent with
39this chapter on the date the replacement loan is issued.
P6 1(7) The replacement loan shall be evidenced by a written
2agreement or electronic record. The pawnbroker shall mail or
3otherwise transmit a copy of the written agreement or electronic
4record to the pledgor within five business days following receipt
5of payment by means for which verification of mailing or electronic
6transmittal can be provided by the pawnbroker.
Section 21201.6 is added to the Financial Code, to
The requirement for a written contract signed by the
10pledgor as set forth in Sections 21201 and 21201.5 may be met
11electronically if all of the following conditions are satisfied:
12(a) The contract and transaction comply with the provisions of
13the Uniform Electronic Transactions Act, as set forth in Title 2.5
14(commencing with Section 1633.1) of Part 2 of Division 3 of the
15Civil Code, as may be applicable at the time that the loan is entered
16into between the pawnbroker and the pledgor.
17(b) Any written disclosures specified in this chapter to be set
18forth in a specified minimum type size are conspicuously presented
19to the pledgor prior to his or her execution of the electronic
21(c) The pawnbroker makes one of the following disclosures:
22(1) If the principal loan amount is below two thousand five
23hundred dollars ($2,500), the pawnbroker discloses the maximum
24compensation due a pawnbroker as set forth in Section 21200.7
25prior to the pledgor’s execution of the electronic contract.
26(2) If the principal loan amount is two thousand five hundred
27dollars ($2,500) or more, the pawnbroker discloses the provisions
28of Sections 21051 and 22054 prior to the pledgor’s execution of
29the electronic contract.
Section 21208 of the Financial Code is amended to
(a) Except as provided in subdivision (b), a pawnbroker
33shall comply with the reporting requirements imposed on
34secondhand dealers under Article 4 (commencing with Section
3521625) of Chapter 9 of Division 8 of the Business and Professions
37(b) A pawnbroker who has issued a loan electronically pursuant
38to Section 21201.6 shall, in lieu of obtaining and reporting the
39customer’s fingerprint as set forth in subdivision (g) of Section
4021628 of the Business and Professions Code, electronically deposit
P7 1the loan proceeds into a deposit account held in the name of the
2pledgor at a depository institution located in the United States.
No reimbursement is required by this act pursuant to
4Section 6 of Article XIII B of the California Constitution because
5the only costs that may be incurred by a local agency or school
6district will be incurred because this act creates a new crime or
7infraction, eliminates a crime or infraction, or changes the penalty
8for a crime or infraction, within the meaning of Section 17556 of
9the Government Code, or changes the definition of a crime within
10the meaning of Section 6 of Article XIII B of the California