BILL ANALYSIS Ó
SB 300
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SENATE THIRD READING
SB
300 (Mendoza)
As Amended July 16, 2015
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Banking |12-0 |Dababneh, Travis | |
| | |Allen, Achadjian, | |
| | |Brown, Chau, Gatto, | |
| | |Hadley, Kim, Low, | |
| | |Perea, Ridley-Thomas, | |
| | |Mark Stone | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Privacy |11-0 |Gatto, Wilk, Baker, | |
| | |Calderon, Chang, | |
| | |Chau, Cooper, | |
| | |Dababneh, Dahle, | |
| | |Gordon, Low | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |16-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
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| | |Calderon, Chang, | |
| | |Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Authorizes electronic pawn transactions. Specifically,
this bill:
1)Provides, beginning January 1, 2017, that the requirement for
a written pawn contract signed by a borrower can be met
electronically, if all of the following conditions are met:
a) The contract and transaction comply with the provisions
of the Uniform Electronic Transactions Act (Civil Code
Section 1633.1 et seq.);
b) Any written disclosures required to be set forth in a
specified minimum type size are conspicuously presented to
the borrower prior to his or her execution of the
electronic contract;
c) The pawnbroker discloses the rates and fees applicable
to the loan before the borrower executes the electronic
contract; and
d) The pawnbroker electronically deposits the loan proceeds
into a deposit account held in the name of the borrower at
a depository institution located in the United States.
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2)Applies all of the following to a replacement loan contract:
a) The loan must be processed as and deemed to be a new
loan subject to the fees and charges permitted on new loans
under the pawnbroker law;
b) The unpaid balance of the prior loan must be debited to
the replacement loan when the same article or articles are
pledged;
c) The borrowers consent to the terms of a replacement loan
is deemed given, as follows:
i) When the borrower requests the replacement loan in
person or electronically, his or her consent to the terms
of the replacement loan are deemed given when he or she
signs the written replacement loan contract in person or
electronically in conformance with the rules for
electronic pawn loans.
ii) When the borrower requests the replacement loan by
mail or through a personal representative, the borrower's
consent to the terms of the replacement loan are deemed
given when all required charges from the prior loan due
are paid in a form acceptable to the pawnbroker.
d) The principal amount of a replacement loan is not
constrained, if the replacement loan is requested in person
or electronically. The principal amount of a replacement
loan must be equal to or less than the principal amount of
the prior loan, if the replacement loan is requested by
mail or through a personal representative.
3)Authorizes a pawnbroker to notify a borrower electronically
regarding the termination of the borrower's loan period, as
specified, if such method of notice is acceptable to the
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borrower.
4)Authorizes a pawnbroker to notify a borrower electronically
regarding the termination of the borrower's loan period, as
specified, if such method of notice is acceptable to the
borrower.
5)Removes, in an electronic pawn transaction, the requirement
that the pawnbroker collect the fingerprint of the pledger,
and instead requires the pawnbroker electronically deposit the
loan proceeds into a depository account held in the name of
the pledger at a depository institution located within the
United States.
6)Requires in an electronic pawn transaction that the pawnbroker
make available, upon request by any peace officer, the account
information used to deposit the loan proceeds, in lieu of
obtaining the customer's fingerprint.
EXISTING LAW:
1)Defines a pawnbroker as any person engaged in the business of
receiving goods, including motor vehicles, in pledge as security
for a loan, and defines pledged property as property held as
security for a loan, the title to which remains with the pledgor
(i.e., borrower) and not the pawnbroker (Financial Code Sections
21000 and 21002).
2)Requires every pawn loan to be evidenced by a written contract, a
copy of which must be furnished to the borrower (Financial Code
Section 21201).
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3)Requires a pawnbroker to notify a borrower in writing, at his or
her last known address, regarding the termination of the
borrower's loan period, by a means for which verification of
mailing can be provided by the pawnbroker (Financial Code Section
21201).
4)Allows a borrower to request, and a pawnbroker to consent, to a
replacement loan to take effect before title to the pawned
property passes to the pawnbroker. To obtain a replacement loan,
the borrower must pay all charges and interest due under the
original loan. The principal amount of the replacement loan may
be lower than, the same as, or higher than the loan being replaced
(Financial Code Section 21201.5).
FISCAL EFFECT: According to Assembly Appropriations Committee,
minor and absorbable enforcement costs to the Department of
Justice (DOJ).
COMMENTS:
Need for this bill as stated by the author:
Under current California law, a California-based
pawnbroker providing a loan must obtain and submit to
law enforcement the thumbprint of the person pledging
property as collateral for the loan. Out-of-state
pawnbrokers conducting business inside of California
via the internet are exempt from this, and other,
requirements. This places California-based pawnbrokers
at a competitive disadvantage and prevents the DOJ from
regulating internet-based pawn transactions.
Additionally, consumers are subject to higher loan fees
and less consumer protections because of the DOJ's lack
of jurisdiction over out-of-state, online pawnbrokers.
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Internet Pawn. Several states allow electronic pawn
transactions including: Colorado, Florida, Texas, New York,
Georgia, New Hampshire, Hawaii and Arizona. Here's how it
works: Customers fill out a form describing the item they wish
to pawn. The online pawn shop then sends the customer an
initial estimate and a pre-paid shipping label to mail in the
item, which is insured. Once the item is fully appraised,
customers receive a final offer. The money is either wired to a
customer's bank account or in other states is sent to the
customer via a pre-paid debit card.
The significant obstacle to internet pawn activity in California
is the requirement that the pawn broker collect the thumbprint
of the pledger. The Assembly Banking and Finance Committee is
unaware of any evidence that this requirement has led to any
criminal convictions or prevents criminal activity. Among law
enforcement officials it is believed that the requirement to
give a thumbprint may act as a deterrent for criminals to pawn
stolen goods. Rather than require a thumbprint for an
electronic transaction, which may be practically impossible,
this bill requires that the loan proceeds must be deposited into
a deposit account in the name of the pledger.
Analysis Prepared by:
Mark Farouk / B. & F. / (916) 319-3081 FN:
0001453
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