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 ----------------------------------------------------------------- |Policy |Banking and Finance |Vote:|12 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Privacy and Consumer | |11 - 0 | | |Protection | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 Page 3 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