BILL ANALYSIS Ó
SB 300
Page 1
Date of Hearing: July 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 300
(Mendoza) - As Amended July 2, 2015
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|Policy |Banking and Finance |Vote:|12 - 0 |
|Committee: | | | |
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| |Privacy and Consumer | |11 - 0 |
| |Protection | | |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill allows, beginning January 1, 2017, pawnbrokers to
create, extend, and service pawn loan contracts over the
internet so long as the loans make certain disclosures and meet
the requirements of the Uniform Electronic Transactions Act.
The bill removes the requirement that pawnbrokers collect and
report a pledgor's thumbprint when issuing loans electronically,
SB 300
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but requires the pawnbrokers to deposit funds only into accounts
in the pledgor's name, and make account information available to
peace officers on request. The bill also allows pawnbrokers to
provide, at the option of the pledgor, various notices and other
communication electronically.
FISCAL EFFECT:
Minor and absorbable enforcement costs to the Department of
Justice (DOJ).
COMMENTS:
1)Purpose. According to the author, this bill allows California
pawnbrokers to enter the growing marketplace of internet-based
pawn loans. The author contends while California-based
pawnbrokers must obtain and submit thumbprints of persons
pledging property as collateral for loans, out-of-state
pawnbrokers are exempt from this requirement and are better
able to conduct business in California online. The author
estimates the internet pawn industry represents 10-15% of all
pawn transactions in the state.
2)New Economy, Old Tech. Pawnbrokers offer secured loans to
individuals using personal property as collateral. Borrowers
may redeem their property upon repayment of the loan principal
plus interest. If the loan is not repaid or extended, the
pawnbroker acquires the personal property and offers it for
sale. California's regulatory authority is limited to
pawnbrokers located within the state. The state regulates the
pawn industry by licensing who may provide pawn services,
establishing rates and terms of service, and imposing
obligations on pawnbrokers to combat trafficking of stolen
goods.
SB 300
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The DOJ administers the California Pawn and Secondhand Dealer
System, an electronic system for reporting inventory and
pledgor information, including fingerprints. Law enforcement
agencies may access those fingerprints to compare against
their own databases. SB 300 waives the fingerprint
requirement for internet transactions because they are not
technically feasible, but requires that pawnbrokers only make
deposits into US accounts in the name of the borrower, and
retain records of those accounts for law enforcement.
Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081