SB 300, as amended, Mendoza. Pawnbrokers: regulations.
(1) 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, 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.
(2) 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.
(3) 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.
(4) 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 depository account held in the name of the 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.
Because a knowing violation of these provisions would be a crime, this bill would impose a state-mandated local program.
(5) 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
2Californians the ability to transact pawn or collateral loans in an
3efficient and expeditious manner wherever they may be located.
4It is further the intent of the Legislature to permit such loans to be
5made in conformity with the Uniform Electronic Transactions Act,
6as set forth in Title 2.5 (commencing with Section 1633.1) of Part
72 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:
redeem the property you have pledged at any time
21until the close of business on ____ [fill in date no less 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.
27During such period the pledgor may redeem the articles upon
28payment of the amount of the loan and the applicable charges. If
P4 1the pledgor and the pawnbroker agree in writing that the pawned
2property may be stored off premises, following the request for
3redemption of the loan, the pawnbroker shall return the pledged
4property to the pledgor the next calendar day when both the
5pawnbroker’s store and the storage facility are open, not to exceed
6two business days.
7(d) If any pledged article is not redeemed during the loan period
8as provided herein, and the pledgor and pawnbroker do not
9mutually agree in writing to extend the loan period, the pawnbroker
10shall notify the pledgor within one month after expiration of the
11loan period. If the pawnbroker fails to notify the pledgor within
12one month after the expiration of the loan period, the pawnbroker
13 shall not charge interest from the day after the expiration of the
14one-month period. The pawnbroker shall notify the pledgor at his
15or her last known mailing or electronic address of the termination
16of the loan period, by a means for which verification of mailing
17or, at the sole option of the pledgor, electronic transmission of the
18notification can be provided by the pawnbroker, and extending the
19right of redemption, during posted business hours, for a period of
2010 days from date of mailing or electronic transmission of that
21notice. Electronic notice of the termination of the loan period shall
22be valid if the pledgor has previously responded to an electronic
23communication sent by the pawnbroker to the pledgor’s last known
24electronic address provided by the pledgor. Upon the initiation of
25each new or replacement loan, the pledgor shall affirm that the
26current electronic address on file with the pawnbroker is valid.
27The 10-day notice shall state, in substantially the same format as
28the following: “If the tenth day falls on a day when the pawnshop
29is closed, the time period is extended to the next day that the
30pawnshop is open.”
31(e) The posted schedule of charges required pursuant to Section
3221200.5 shall contain a notice informing the pledgor that if he or
33she desires, the pawnbroker shall send the notice of termination
34of the loan period by registered or certified mail with return receipt
35requested, upon prepayment of the mailing costs.
36(f) If 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
P5 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.
5(g) The sale of pledged property is a misdemeanor pursuant to
Section 21201.5 of the Financial Code is amended to
(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 any method acceptable to the pawnbroker,
30including, but not limited to, United States mail, private mail, a
31personal representative, or electronic transfer. If insufficient
32payment is tendered by the pledgor or is not tendered in cash or a
33form acceptable to the pawnbroker, the pawnbroker shall, if
34commercially reasonable, return the payment in the same manner
35that the payment was delivered by the pledgor, or by another
36commercially reasonable manner, within five business days, and
37shall include a statement advising the pledgor the reason the
38payment was rejected. The pawnbroker is under no obligation to
39enter into a replacement loan if the amount is insufficient or the
P6 1method of payment or form of tender is not cash or acceptable to
3(3) The unpaid balance of the prior loan shall be debited to the
4replacement loan on which the same article or articles have been
5pledged. The replacement loan contract shall disclose the amount
6of the prior loan that is debited and shall otherwise be consistent
7with Section 21201.
8(4) If the pledgor requests a replacement loan in person or
9electronically, the pledgor’s consent to the terms of the replacement
10loan shall be deemed given when he or she signs the written
11replacement loan contract in person or electronically in conformity
12with Section 21201.6.
13(5) If the pledgor requests a replacement loan by mail or through
14a personal representative, the pledgor’s consent to the terms of the
15replacement loan shall be deemed given when all required charges
16from the prior loan then due are paid in a form acceptable to the
17pawnbroker. The principal amount of a replacement loan requested
18by mail or through a personal representative shall not exceed the
19principal amount of the prior loan.
20(6) The terms of the replacement loan shall be consistent with
21this chapter on the date the replacement loan is issued.
22(7) The replacement loan shall be evidenced by a written
23agreement or electronic record. The pawnbroker shall mail or
24otherwise transmit a copy of the written agreement or electronic
25record to the pledgor within five business days following receipt
26of payment by means for which verification of mailing or electronic
27transmittal 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
31pledgor as set forth in Section 21201.5 may be met electronically
32if all of the following conditions are satisfied:
33(a) The contract and transaction comply with the provisions of
34the Uniform Electronic Transactions Act, as set forth in Title 2.5
35(commencing with Section 1633.1) of Part 2 of Division 3 of the
36Civil Code, as may be applicable at the time that the loan is entered
37into between the pawnbroker and the pledgor.
38(b) Any written disclosures specified in this chapter to be set
39forth in a specified minimum type size are conspicuously presented
P7 1to the pledgor prior to his or her execution of the electronic
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.
Section 21201.6 is added to the Financial Code, to
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
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.
Section 21208 of the Financial Code is amended to
(a) Except as provided in subdivision (c), a pawnbroker
2shall comply with the reporting requirements imposed on
3secondhand dealers under Article 4 (commencing with Section
421625) of Chapter 9 of Division 8 of the Business and Professions
6(b) A pawnbroker who has issued a loan electronically pursuant
7to Section 21201.6 shall electronically deposit the loan proceeds
8into a depository account held in the name of the pledgor at a
9depository institution located within the United States.
10(c) A pawnbroker who has issued a loan electronically pursuant
11to Section 21201.6 shall make available, upon request by any peace
12officer, the account information used to deposit the loan proceeds,
13in lieu of obtaining and reporting the customer’s fingerprint as set
begin delete subdivision (g) ofend delete Section 21628 of the Business and
No reimbursement is required by this act pursuant to
17Section 6 of Article XIII B of the California Constitution because
18the only costs that may be incurred by a local agency or school
19district will be incurred because this act creates a new crime or
20infraction, eliminates a crime or infraction, or changes the penalty
21for a crime or infraction, within the meaning of Section 17556 of
22the Government Code, or changes the definition of a crime within
23the meaning of Section 6 of Article XIII B of the California