BILL NUMBER: SB 300	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 11, 2015
	AMENDED IN SENATE  MAY 5, 2015
	AMENDED IN SENATE  APRIL 30, 2015
	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
 and repeal  Section 21201.6  to,   of,
 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.  Existing law requires
the contract to provide a 4-month loan period. 
   This  bill   bill, on and after January 1,
2017,  would permit the  requirement for a 
requirements for an original  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   specify  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. 
The bill would also permit the replacement loan to be issued
electronically, beginning January 1, 2016, subject to the same
conditions for the original written contract described above. 
   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 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.
  the duration of the loan period.  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 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 
    (e)     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." The
electronic notice of the termination of the loan  period
  period, if the option is offered by the pawnbroker,
 shall 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 provided by
the pledgor. Upon the initiation of each new or replacement loan,
the pledgor shall affirm that the current electronic address on file
with the pawnbroker is valid. 
   (e) However, the 
    (f)     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) 
    (   g)  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) 
    (   h)  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) Alternatively, a pledgor may request, and a pawnbroker may
consent to, a replacement loan 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) 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  
Section  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 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 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 contract. 
   (d) This section shall remain in effect only until January 1,
2017, and as of that date is repealed. 
   SEC. 5.    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 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 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 contract.
   (d) This section shall become operative on January 1, 2017. 
   SEC. 5.   SEC. 6.   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 depository institution located in the United States.
   SEC. 6.   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.