Amended in Assembly July 2, 2015

Amended in Assembly June 11, 2015

Amended in Senate May 5, 2015

Amended in Senate April 30, 2015

Amended in Senate March 26, 2015

Senate BillNo. 300


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 of, the Financial Code, relating to pawnbrokers.

LEGISLATIVE COUNSEL’S DIGEST

SB 300, as amended, Mendoza. Pawnbrokers: regulations.

begin delete

Existing

end delete

begin insert(1)end insertbegin insertend insertbegin insertExistingend insert 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, on and after January 1, 2017, would permit the 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 specify that the contract be for a minimum of 4 months.

begin delete

Existing

end delete

begin insert(2)end insertbegin insertend insertbegin insertExistingend insert 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.

begin delete

Existing

end delete

begin insert(3)end insertbegin insertend insertbegin insertExistingend insert 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.

begin delete

Existing

end delete

begin insert(4)end insertbegin insertend insertbegin insertExistingend insert 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 abegin delete depositend deletebegin insert depositoryend insert account held in the name of thebegin delete pledgor, as specified.end deletebegin insert pledgor at a depository institution located within the United States, and upon request by any peace officer, make available the account information used to deposit the loan proceeds.end insert

Because a knowing violation of these provisions would be a crime, this bill would impose a state-mandated local program.

begin insert(5)end insertbegin insertend insertThe 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:

P3    1

SECTION 1.  

It is the intent of the Legislature to permitbegin delete the
2citizens of Californiaend delete
begin insert Californiansend insert the ability to transact pawn or
3collateral loans in an efficient and expeditious manner wherever
4they may be located. It is further the intent of the Legislature to
5permit such loans to be made in conformity with the Uniform
6Electronic Transactions Act, as set forth in Title 2.5 (commencing
7with Section 1633.1) of Part 2 of Division 3 of the Civil Code.

begin delete
8

SEC. 2.  

Section 21201 of the Financial Code is amended to
9read:

10

21201.  

(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 the duration of the loan period.
P4    1During such period the pledgor may redeem the articles upon
2payment of the amount of the loan and the applicable charges. If
3the pledgor and the pawnbroker agree in writing that the pawned
4property may be stored off premises, following the request for
5redemption of the loan, the pawnbroker shall return the pledged
6property to the pledgor the next calendar day when both the
7pawnbroker’s store and the storage facility are open, not to exceed
8two business days.

9(d) If any pledged article is not redeemed during the loan period
10as provided herein, and the pledgor and pawnbroker do not
11mutually agree in writing to extend the loan period, the pawnbroker
12shall notify the pledgor within one month after expiration of the
13loan period. If the pawnbroker fails to notify the pledgor within
14one month after the expiration of the loan period, the pawnbroker
15shall not charge interest from the day after the expiration of the
16one-month period.

17(e) The pawnbroker shall notify the pledgor at his or her last
18known mailing or electronic address of the termination of the loan
19period, by a means for which verification of mailing or, at the sole
20option of the pledgor, electronic transmission of the notification
21can be provided by the pawnbroker, and extending the right of
22redemption, during posted business hours, for a period of 10 days
23from date of mailing or electronic transmission of that notice. The
2410-day notice shall state, in substantially the same format as the
25following: “If the tenth day falls on a day when the pawnshop is
26closed, the time period is extended to the next day that the
27pawnshop is open.” The electronic notice of the termination of the
28loan period, if the option is offered by the pawnbroker, shall be
29valid if the pledgor has previously responded to an electronic
30communication sent by the pawnbroker to the pledgor’s last known
31electronic address provided by the pledgor. Upon the initiation of
32each new or replacement loan, the pledgor shall affirm that the
33current electronic address on file with the pawnbroker is valid.

34(f) The posted schedule of charges required pursuant to Section
3521200.5 shall contain a notice informing the pledgor that if he or
36she desires, the pawnbroker shall send the notice of termination
37of the loan period by registered or certified mail with return receipt
38requested, upon prepayment of the mailing costs.

39(g) If any pledged article is not redeemed within the 10-day
40notice period, the pawnbroker shall become vested with all right,
P5    1title, and interest of the pledgor, or his or her assigns, to the pledged
2article, to hold and dispose of as his or her own property. Any
3other provision of law relating to the foreclosure and sale of
4pledges shall not be applicable to any pledge the title to which is
5transferred in accordance with this section.

6(h) The pawnbroker shall not sell any article of pledged property
7until he or she has become vested with the title to that property
8pursuant to this section. The sale of pledged property is a
9misdemeanor pursuant to Section 21209.

end delete
10begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 21201 of the end insertbegin insertFinancial Codeend insertbegin insert is amended to
11read:end insert

12

21201.  

begin insert(a)end insertbegin insertend insertEvery loan made by a pawnbroker for which goods
13are received in pledge as security shall be evidenced by a written
14contract, a copy of which shall be furnished to thebegin delete borrower.end delete
15begin insert pledgor.end insert The loan contract shall provide abegin delete four-month loan period,end delete
16begin insert loan period that is a minimum of four months,end insert shall set forth the
17loan period and the date on which the loan is due and payable, and
18shall clearly inform thebegin delete borrowerend deletebegin insert pledgorend insert of his or her right to
19redeem the pledge during the loan period.

begin delete

20Every

end delete

21begin insert(b)end insertbegin insertend insertbegin insertEveryend insert loan contract shall contain the following notice, in at
22least 8-point boldface type and circumscribed by a box,
23immediately above the space for thebegin delete borrower’send deletebegin insert pledgor’send insert
24 signature:

25“You may redeem the property you have pledged at any time
26until the close of business on ____ [fill in datebegin insert no less thanend insert four
27months from date loan begins]. To redeem, you must pay the
28amount of the loan and the applicable charges which have accrued
29through the date on which you redeem.”

begin delete

30Every

end delete

31begin insert(c)end insertbegin insertend insertbegin insertEveryend insert pawnbroker shall retain in his or her possession every
32article pledged to him or her forbegin delete a period of four months.end deletebegin insert the
33duration of the loan period.end insert
During such period thebegin delete borrowerend delete
34begin insert pledgorend insert may redeem the articles upon payment of the amount of
35the loan and the applicable charges. If thebegin delete borrowerend deletebegin insert pledgorend insert and
36the pawnbroker agree in writing that the pawned property may be
37stored off premises, following the request for redemption of the
38loan, the pawnbroker shall return the pledged property to the
39begin delete consumerend deletebegin insert pledgorend insert the next calendar day when both the
P6    1pawnbroker’s store and the storage facility are open, not to exceed
2two business days.

begin delete

3If

end delete

4begin insert(d)end insertbegin insertend insertbegin insertIfend insert any pledged article is not redeemed during thebegin delete four-monthend delete
5 loan period as provided herein, and thebegin delete borrowerend deletebegin insert pledgorend insert and
6pawnbroker do not mutually agree in writing to extend the loan
7period, the pawnbroker shall notify thebegin delete borrowerend deletebegin insert pledgorend insert within
8one month after expiration of the loan period. If the pawnbroker
9fails to notify thebegin delete borrowerend deletebegin insert pledgorend insert within one month after the
10expiration of the loan period, the pawnbroker shall not charge
11interest from the day after the expiration of the one-month period.
12The pawnbroker shall notify thebegin delete borrowerend deletebegin insert pledgorend insert at his or her
13last knownbegin insert mailing or electronicend insert address of the termination of the
14loan period, by a means for which verification of mailingbegin delete or
15delivery of theend delete
begin insert or, at the sole option of the pledgor, electronic
16transmission of theend insert
notification can be provided by the pawnbroker,
17and extending the right of redemption, during posted business
18hours, for a period of 10 days from date of mailingbegin insert or electronic
19transmissionend insert
of that notice.begin insert Electronic notice of the termination
20of the loan period shall be valid if the pledgor has previously
21responded to an electronic communication sent by the pawnbroker
22to the pledgor’s last known electronic address provided by the
23pledgor. Upon the initiation of each new or replacement loan, the
24pledgor shall affirm that the current electronic address on file with
25the pawnbroker is valid.end insert
The 10-day notice shallbegin delete include a
26statement that:end delete
begin insert state, in substantially the same format as the
27following:end insert
“If the tenth day falls on a day when the pawnshop is
28closed, the time period is extended to the next day that the
29pawnshop is open.”

begin delete

30 However, the

end delete

31begin insert(e)end insertbegin insertend insertbegin insertTheend insert posted schedule of charges required pursuant to Section
3221200.5 shall contain a notice informing thebegin delete borrowerend deletebegin insert pledgorend insert that
33if he or she desires, the pawnbroker shall send the notice of
34termination of the loan period by registered or certified mail with
35return receipt requested, upon prepayment of the mailing costs.begin delete Ifend delete

begin insert end insert
36begin insert(f)end insertbegin insertend insertbegin insertIfend insert any pledged article is not redeemed within the 10-day
37notice period, the pawnbroker shall become vested with all right,
38title, and interest of the pledgor, or his or her assigns, to the pledged
39article, to hold and dispose of as his or her own property. Any
40other provision of law relating to the foreclosure and sale of
P7    1 pledges shall not be applicable to any pledge the title to which is
2transferred in accordance with this section. The pawnbroker shall
3not sell any article of pledged property until he or she has become
4vested with the title to that property pursuant to this section.begin delete Theend delete

5begin insert(g)end insertbegin insertend insertbegin insertTheend insert sale of pledged property is a misdemeanor pursuant to
6Section 21209.

7

SEC. 3.  

Section 21201.5 of the Financial Code is amended to
8read:

9

21201.5.  

(a) During the contractual loan period and any
10extension thereof, but prior to the start of the 10-day grace period
11provided in subdivision (d) of Section 21201, a pledgor may
12request, and a pawnbroker may consent to, a replacement loan to
13take effect upon the expiration of the loan period stated in the
14active loan contract delivered to the pledgor under Section 21201
15or this section.

16(b) Alternatively, a pledgor may request, and a pawnbroker may
17consent to, a replacement loan during the 10-day grace period
18provided in subdivision (d) of Section 21201. Any such
19replacement loan shall become effective on the date it is issued.

20(c) All of the following shall apply to a replacement loan issued
21pursuant to this section:

22(1) The loan shall be processed as, and deemed to be, a new
23loan subject to all other fees and charges permitted by this chapter.

24(2) Before a replacement loan may be issued, the pledgor shall
25pay off all outstanding charges from the prior loan then due,
26including interest or any loan writing, storage, notification, or other
27fee authorized in this chapter, in cash or another form acceptable
28to the pawnbroker. The pledgor’s payment may be delivered to
29the pawnbroker by anybegin delete method,end deletebegin insert method acceptable to the
30pawnbroker,end insert
including, but not limited to, United States mail,
31private mail, a personal representative, or electronic begin delete transfer,
32provided that the manner of payment is acceptable to the
33pawnbroker.end delete
begin insert transfer.end insert If insufficient payment is tendered by the
34pledgor or isbegin insert notend insert tendered inbegin insert cash orend insert a formbegin delete unacceptableend delete
35begin insert acceptableend insert to the pawnbroker, the pawnbroker shall, if
36commercially reasonable, return the payment in the same manner
37that the payment was delivered by the pledgor, or by another
38commercially reasonable manner, within five business days, and
39shall include a statement advising the pledgor the reason the
40payment was rejected. The pawnbroker is under no obligation to
P8    1enter into a replacement loan if the amount is insufficient or the
2begin delete formend deletebegin insert methodend insert of payment orbegin delete methodend deletebegin insert formend insert of tender isbegin delete unacceptableend delete
3begin insert not cash or acceptableend insert to the pawnbroker.

4(3) The unpaid balance of the prior loan shall be debited to the
5replacement loan on which the same article or articles have been
6pledged. The replacement loan contract shall disclose the amount
7of the prior loan that is debited and shall otherwise be consistent
8with Section 21201.

9(4) If the pledgor requests a replacement loan in person or
10electronically, the pledgor’s consent to the terms of the replacement
11loan shall be deemed given when he or she signs the written
12replacement loan contract in person or electronically in conformity
13with Section 21201.6.

14(5) If the pledgor requests a replacement loan by mail or through
15a personal representative, the pledgor’s consent to the terms of the
16replacement loan shall be deemed given when all required charges
17from the prior loan then due are paid in a form acceptable to the
18pawnbroker. The principal amount of a replacement loan requested
19by mail or through a personal representative shall not exceed the
20principal amount of the prior loan.

21(6) The terms of the replacement loan shall be consistent with
22this chapter on the date the replacement loan is issued.

23(7) The replacement loan shall be evidenced by a written
24agreement or electronic record. The pawnbroker shall mail or
25otherwise transmit a copy of the written agreement or electronic
26record to the pledgor within five business days following receipt
27of payment by means for which verification of mailing or electronic
28transmittal can be provided by the pawnbroker.

29

SEC. 4.  

Section 21201.6 is added to the Financial Code, to
30read:

31

21201.6.  

The requirement for a written contract signed by the
32pledgor as set forth in Section 21201.5 may be met electronically
33if all of the following conditions are satisfied:

34(a) The contract and transaction comply with the provisions of
35the Uniform Electronic Transactions Act, as set forth in Title 2.5
36(commencing with Section 1633.1) of Part 2 of Division 3 of the
37Civil Code, as may be applicable at the time that the loan is entered
38into between the pawnbroker and the pledgor.

39(b) Any written disclosures specified in this chapter to be set
40forth in a specified minimum type size are conspicuously presented
P9    1to the pledgor prior to his or her execution of the electronic
2contract.

3(c) The pawnbroker makes one of the following disclosures:

4(1) If the principal loan amount is below two thousand five
5hundred dollars ($2,500), the pawnbroker discloses the maximum
6compensation due a pawnbroker as set forth in Section 21200.7
7prior to the pledgor’s execution of the electronic contract.

8(2) If the principal loan amount is two thousand five hundred
9dollars ($2,500) or more, the pawnbroker discloses the provisions
10of Sections 21051 and 22054 prior to the pledgor’s execution of
11the electronic contract.

12(d) This section shall remain in effect only until January 1, 2017,
13and as of that date is repealed.

14

SEC. 5.  

Section 21201.6 is added to the Financial Code, to
15read:

16

21201.6.  

The requirement for a written contract signed by the
17pledgor as set forth in Sections 21201 and 21201.5 may be met
18electronically if all of the following conditions are satisfied:

19(a) The contract and transaction comply with the provisions of
20the Uniform Electronic Transactions Act, as set forth in Title 2.5
21(commencing with Section 1633.1) of Part 2 of Division 3 of the
22Civil Code, as may be applicable at the time that the loan is entered
23into between the pawnbroker and the pledgor.

24(b) Any written disclosures specified in this chapter to be set
25forth in a specified minimum type size are conspicuously presented
26to the pledgor prior to his or her execution of the electronic
27contract.

28(c) The pawnbroker makes one of the following disclosures:

29(1) If the principal loan amount is below two thousand five
30hundred dollars ($2,500), the pawnbroker discloses the maximum
31compensation due a pawnbroker as set forth in Section 21200.7
32prior to the pledgor’s execution of the electronic contract.

33(2) If the principal loan amount is two thousand five hundred
34dollars ($2,500) or more, the pawnbroker discloses the provisions
35of Sections 21051 and 22054 prior to the pledgor’s execution of
36the electronic contract.

37(d) This section shall become operative on January 1, 2017.

38

SEC. 6.  

Section 21208 of the Financial Code is amended to
39read:

P10   1

21208.  

(a) Except as provided in subdivisionbegin delete (b),end deletebegin insert (c),end insert a
2pawnbroker shall comply with the reporting requirements imposed
3on secondhand dealers under Article 4 (commencing with Section
421625) of Chapter 9 of Division 8 of the Business and Professions
5Code.

begin delete

6(b) A pawnbroker who has issued a loan electronically pursuant
7to Section 21201.6 shall, in lieu of obtaining and reporting the
8customer’s fingerprint as set forth in subdivision (g) of Section
921628 of the Business and Professions Code, electronically deposit
10the loan proceeds into a deposit account held in the name of the
11pledgor at a depository institution located in the United States.

end delete
begin insert

12(b) A pawnbroker who has issued a loan electronically pursuant
13to Section 21201.6 shall electronically deposit the loan proceeds
14into a depository account held in the name of the pledgor at a
15depository institution located within the United States.

end insert
begin insert

16(c) A pawnbroker who has issued a loan electronically pursuant
17to Section 21201.6 shall make available, upon request by any peace
18officer, the account information used to deposit the loan proceeds,
19in lieu of obtaining and reporting the customer’s fingerprint as
20set forth in subdivision (g) of Section 21628 of the Business and
21Professions Code.

end insert
22

SEC. 7.  

No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.



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