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.
begin delete billend delete would permit the begin delete requirement for aend delete 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 begin delete requireend delete 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. The bill would provide that the electronic notice of the termination of the loan period would be valid only if the pledgor has previously responded to an electronic communication sent by the pawnbroker to the pledgor’s last known electronic address and would require the pledgor to affirm the electronic address on file, as prescribed.
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
11are received in pledge as security shall be evidenced by a written
12contract, a copy of which shall be furnished to the pledgor. The
13loan contract shall provide a loan period that is a minimum of four
14months, shall set forth the loan period and the date on which the
15loan is due and payable, and shall clearly inform the pledgor of
16his or her right to redeem the pledge during the loan period.
17(b) Every loan contract shall contain the following notice, in at
18least 8-point boldface type and circumscribed by a box,
19immediately above the space for the pledgor’s signature:
20“You may redeem the
property you have pledged at any time
21 until the close of business on ____ [fill in date no fewer than four
22months from date loan begins]. To redeem, you must pay the
23amount of the loan and the applicable charges which have accrued
24through the date on which you redeem.”
25(c) Every pawnbroker shall retain in his or her possession every
26article pledged to him or her for
begin delete a period of four months.end delete During such period the pledgor may
28redeem the articles upon payment of the amount of the loan and
29the applicable charges. If the pledgor and the pawnbroker agree
30in writing that the pawned property may be stored off premises,
31following the request for redemption of the loan, the pawnbroker
32shall return the pledged property to the pledgor the next calendar
33day when both the pawnbroker’s store and the storage facility are
34open, not to exceed two business days.
P4 1(d) If any pledged article is not redeemed during the
begin delete four-monthend delete
2 loan period as provided herein, and the pledgor and pawnbroker
3do not mutually agree in writing to extend the loan period, the
4pawnbroker shall notify the pledgor within one month after
5expiration of the loan period. If the pawnbroker fails to notify the
6pledgor within one month after the expiration of the loan period,
7the pawnbroker shall not charge interest from the day after the
8expiration of the one-month period.
begin delete Theend delete
9 pawnbroker shall notify the pledgor at his or her last
10known mailing or electronic address of the termination of the loan
11period, by a means for which verification of mailing or, at the sole
12option of the pledgor, electronic transmission of the notification
13can be provided by the pawnbroker, and extending the right of
14redemption, during posted business hours, for a period of 10 days
15from date of mailing or electronic transmission of that notice. The
1610-day notice shall state, in substantially the same format as the
17following: “If the tenth day falls on a day when the pawnshop is
18closed, the time period is extended to the next day that the
19pawnshop is open.” The electronic notice of the termination of the
begin delete periodend delete shall
begin delete onlyend delete if the pledgor has previously responded to an
22electronic communication sent by the pawnbroker to the pledgor’s
23last known electronic address provided by the pledgor. Upon the
24initiation of each new or replacement loan, the pledgor shall affirm
25that the current electronic address on file with the pawnbroker is
27(e) However, theend delete
28 posted schedule of charges required pursuant to Section
2921200.5 shall contain a notice informing the pledgor that if he or
30she desires, the pawnbroker shall send the notice of termination
31of the loan period by registered or certified mail with return receipt
32requested, upon prepayment of the mailing costs.
34 If any pledged article is not redeemed within the 10-day
35notice period, the pawnbroker shall become vested with all right,
36title, and interest of the pledgor, or his or her assigns, to the pledged
37article, to hold and dispose of as his or her own property. Any
38other provision of law relating to the foreclosure and sale of
39pledges shall not be applicable to any pledge the title to which is
40transferred in accordance with this section.
P5 1(g)end delete
2 The pawnbroker shall not sell any article of
3until he or she has become vested with the title to that property
4pursuant to this section. The sale of pledged property is a
5misdemeanor pursuant to Section 21209.
Section 21201.5 of the Financial Code is amended to
(a) During the contractual loan period and any
9extension thereof, but prior to the start of the 10-day grace period
10provided in subdivision (d) of Section 21201, a pledgor may
11request, and a pawnbroker may consent to, a replacement loan to
12take effect upon the expiration of the loan period stated in the
13active loan contract delivered to the pledgor under Section 21201
14or this section.
15(b) Alternatively, a pledgor may request, and a pawnbroker may
16consent to, a replacement loan during the 10-day grace period
17provided in subdivision (d) of Section 21201. Any such
18replacement loan shall become effective on the date it is issued.
19(c) All of the following shall apply to a replacement loan issued
20pursuant to this section:
21(1) The loan shall be processed as, and deemed to be, a new
22loan subject to all other fees and charges permitted by this chapter.
23(2) Before a replacement loan may be issued, the pledgor shall
24pay off all outstanding charges from the prior loan then due,
25including interest or any loan writing, storage, notification, or other
26fee authorized in this chapter, in cash or another form acceptable
27to the pawnbroker. The pledgor’s payment may be delivered to
28the pawnbroker by any method, including, but not limited to,
29United States mail, private mail, a personal representative, or
30electronic transfer, provided that the manner of payment is
31acceptable to the pawnbroker. If insufficient payment is tendered
32by the pledgor or is tendered in a form unacceptable to the
33pawnbroker, the pawnbroker shall, if commercially reasonable,
34return the payment in the same manner that the payment was
35delivered by the pledgor, or by another commercially reasonable
36manner, within five business days, and shall include a statement
37advising the pledgor the reason the payment was rejected. The
38pawnbroker is under no obligation to enter into a replacement loan
39if the amount is insufficient or the form of payment or method of
40tender is unacceptable to the pawnbroker.
P6 1(3) The unpaid balance of the prior loan shall be debited to the
2replacement loan on which the same article or articles have been
3pledged. The replacement loan contract shall disclose the amount
4of the prior loan that is debited and shall otherwise be consistent
5with Section 21201.
6(4) If the pledgor requests a replacement loan in person or
7electronically, the pledgor’s consent to the terms of the replacement
8loan shall be deemed given when he or she signs the written
9replacement loan contract in person or electronically in conformity
10with Section 21201.6.
11(5) If the pledgor requests a replacement loan by mail or through
12a personal representative, the pledgor’s consent to the terms of the
13replacement loan shall be deemed given when all required charges
14from the prior loan then due are paid in a form acceptable to the
15pawnbroker. The principal amount of a replacement loan requested
16by mail or through a personal representative shall not exceed the
17principal amount of the prior loan.
18(6) The terms of the replacement loan shall be consistent with
19this chapter on the date the replacement loan is issued.
20(7) The replacement loan shall be evidenced by a written
21agreement or electronic record. The pawnbroker shall mail or
22otherwise transmit a copy of the written agreement or electronic
23record to the pledgor within five business days following receipt
24of payment by means for which verification of mailing or electronic
25transmittal 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
29pledgor as set forth in
begin delete Sections 21201 andend delete 21201.5 may
30be met electronically if all of the following conditions are satisfied:
31(a) The contract and transaction comply with the provisions of
32the Uniform Electronic Transactions Act, as set forth in Title 2.5
33(commencing with Section 1633.1) of Part 2 of Division 3 of the
34Civil Code, as may be applicable at the time that the loan is entered
35into between the pawnbroker and the pledgor.
36(b) Any written disclosures specified in this chapter to be set
37forth in a specified minimum type size are conspicuously presented
38to the pledgor prior to his or her execution of the electronic
40(c) The pawnbroker makes one of the following disclosures:
P7 1(1) If the principal loan amount is below two thousand five
2hundred dollars ($2,500), the pawnbroker discloses the maximum
3compensation due a pawnbroker as set forth in Section 21200.7
4prior to the pledgor’s execution of the electronic contract.
5(2) If the principal loan amount is two thousand five hundred
6dollars ($2,500) or more, the pawnbroker discloses the provisions
7of Sections 21051 and 22054 prior to the pledgor’s execution of
8the electronic contract.
Section 21208 of the Financial Code is amended to
(a) Except as provided in subdivision (b), a pawnbroker
39shall comply with the reporting requirements imposed on
40secondhand dealers under Article 4 (commencing with Section
P8 121625) of Chapter 9 of Division 8 of the Business and Professions
3(b) A pawnbroker who has issued a loan electronically pursuant
4to Section 21201.6 shall, in lieu of obtaining and reporting the
5customer’s fingerprint as set forth in subdivision (g) of Section
621628 of the Business and Professions Code, electronically deposit
7the loan proceeds into a deposit account held in the name of the
8pledgor at a depository institution located in the United States.
No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California