BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 300  


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          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       |
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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