BILL ANALYSIS Ó
SB 300
Page 1
SENATE THIRD READING
SB
300 (Mendoza)
As Amended September 4, 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, Calderon, | |
| | |Chang, Daly, Eggman, | |
SB 300
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| | |Gallagher, Eduardo | |
| | |Garcia, Jones, Quirk, | |
| | |Rendon, Wagner, Weber, | |
| | |Wood | |
| | | | |
| | | | |
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SUMMARY: Authorizes pawn transaction replacement loan to be
conducted electronically. Specifically, this bill:
1)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
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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.
e) Requires the replacement loan to be evidenced by a
written agreement or electronic record and requires the
pawnbroker to mail or transmit a copy of the record to the
pledger within five business days following receipt of
payment by means for which verification of mailing or
electronic transmittal can be provided by the pawnbroker.
2)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.
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
borrower.
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).
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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).
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.
COMMENTS:
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
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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.
This bill allows a replacement loan to be done electronically,
but not the original loan. Previous versions of this bill would
have authorized electronic pawn originations without a
thumbprint. The author, sponsors and law enforcement opposition
were unable to create a system to verify the pledger's identity
in an electronic origination so those provisions were taken out
of the bill.
Analysis Prepared by:
Mark Farouk / B. & F. / (916) 319-3081 FN:
0001997