BILL NUMBER: SB 1959 ENROLLED BILL TEXT PASSED THE SENATE AUGUST 30, 1996 PASSED THE ASSEMBLY AUGUST 28, 1996 AMENDED IN ASSEMBLY JULY 2, 1996 AMENDED IN ASSEMBLY JUNE 18, 1996 AMENDED IN SENATE MAY 23, 1996 AMENDED IN SENATE APRIL 25, 1996 AMENDED IN SENATE APRIL 17, 1996 INTRODUCED BY Senator Calderon FEBRUARY 23, 1996 An act to amend Sections 1789.30, 1789.31, 1789.35, and 1789.37 of, and to add Section 1789.33 to, the Civil Code, and to amend Section 22050 of the Financial Code, relating to check cashers. LEGISLATIVE COUNSEL'S DIGEST SB 1959, Calderon. Check cashers: military identification card and deferred deposits. Existing law regulates the provision of certain services by check cashers, as defined. Existing law requires check cashers to post a complete schedule of fees for specified services provided to customers, and a list of acceptable identification, as specified. In addition, under existing law it is a misdemeanor for a check casher to charge a fee in excess of 3% of the face amount of the check or $3, whichever is greater, for cashing a payroll check or government check if identification is provided by the customer. For purposes of this provision, identification is limited to a California driver's license or a California identification card. Existing law also requires the owner of a check casher's business to obtain a permit to conduct that business, and specifies the information to be provided on an application for that permit. This bill would expand the scope of these provisions to specifically permit check cashers to defer the deposit of personal checks written by their customers for up to 30 days, as specified. The bill would define a deferred deposit for these purposes. Among other things, the bill would require every deferred deposit transaction to be made pursuant to a written agreement that has been signed, as specified. The bill would also require disclosure of any fees to be charged for a deferred deposit, as specified. The bill would specifically provide that a customer shall not be subject to criminal penalties for the failure to comply with that written agreement. The bill would also require applicants for a permit to conduct a check casher's business to disclose whether they intend to enter into deferred deposit agreements. The bill would provide that check cashers who hold a valid permit shall not be subject to the California Finance Lenders Law, as specified. The bill would provide that the identification required for purposes of the provision limiting the fees that may be charged for cashing a payroll check or a government check may be a valid United States military identification card, in addition to a California driver's license or a California identification card. The bill would also impose restrictions on the fees that may be charged for cashing any personal check, whether for immediate or deferred deposit, and would prohibit a check casher from entering into more than one deferred deposit agreement at a time with the same customer, as specified. The bill would also make a related change. The bill would also permit collection of a fee for the return of a deferred deposit check that is dishonored. A violation of these provisions would be a misdemeanor, thus imposing a state-mandated local program. The bill also would provide that any person who violates these provisions regulating check cashers, shall be liable for a civil penalty not to exceed $2,000. The bill would additionally permit any person who is injured by any violation of those provisions to bring an action, as specified. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1789.30 of the Civil Code is amended to read: 1789.30. Every check casher, as applicable to the services provided, shall post a complete, detailed, and unambiguous schedule of all fees for (a) cashing checks, drafts, money orders, or other commercial paper serving the same purpose and making any deferred deposit thereof, (b) the sale or issuance of money orders, and (c) the initial issuance of any identification card. Each check casher shall also post a list of valid identification which is acceptable in lieu of identification provided by the check casher. The information required by this section shall be clear, legible, and in letters not less than one-half inch in height. The information shall be posted in a conspicuous location in the unobstructed view of the public within the check casher's premises. SEC. 2. Section 1789.31 of the Civil Code is amended to read: 1789.31. (a) As used in this title, a "check casher" means a person or entity that for compensation engages, in whole or in part, in the business of cashing checks, warrants, drafts, money orders, or other commercial paper serving the same purpose. "Check casher" does not include a state or federally chartered bank, savings association, credit union, or industrial loan company. "Check casher" also does not include a retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers that cashes checks or issues money orders for a minimum flat fee not exceeding two dollars ($2) as a service to its customers that is incidental to its main purpose or business. (b) As used in this title, "deferred deposit" means a transaction whereby the check casher refrains from depositing a personal check written by a customer until a specific date, pursuant to a written agreement, as provided in Section 1789.33. SEC. 2.5. Section 1789.33 is added to the Civil Code, to read: 1789.33. (a) A check casher may defer the deposit of a personal check written by a customer for up to 30 days, pursuant to the provisions of this section. The face amount of the check shall not exceed three hundred dollars ($300). Each deferred deposit shall be made pursuant to a written agreement that has been signed by the customer and by the check casher or an authorized representative of the check casher. The written agreement shall contain a statement of the total amount of any fees charged for the deferred deposit, expressed both in United States currency and as an annual percentage rate (APR). The written agreement shall authorize the check casher to defer deposit of the personal check until a specific date not later than 30 days from the date the written agreement was signed and executed. The written agreement shall not permit the check casher to accept collateral. (b) A customer who enters into a deferred deposit agreement and offers a personal check to a check casher pursuant to that agreement shall not be subject to any criminal penalty for the failure to comply with the terms of that agreement. SEC. 3. Section 1789.35 of the Civil Code is amended to read: 1789.35. (a) A check casher shall not charge a fee for cashing a payroll check or government check in excess of 3 percent if identification is provided by the customer, or 3.5 percent without the provision of identification, of the face amount of the check, or three dollars ($3), whichever is greater. Identification, for purposes of this section, is limited to a California driver's license, a California identification card, or a valid United States military identification card. (b) A check casher may charge a fee of no more than ten dollars ($10) to set up an initial account and issue an optional identification card for providing check cashing services. A replacement optional identification card may be issued at a cost not to exceed five dollars ($5). (c) A check casher shall provide a receipt to the customer for each transaction. (d) Subject to the limitations of Section 1789.33, a check casher may charge a fee for cashing a personal check, as posted pursuant to Section 1789.30, for immediate deposit in an amount not to exceed 12 percent of the face value of the check, or for deferred deposit in an amount not to exceed 15 percent of the face value of the check. (e) A check casher shall not enter into an agreement for a deferred deposit with a customer during the period of time that an earlier written agreement for a deferred deposit for the same customer is in effect. (f) A check casher who enters into a deferred deposit agreement and accepts a check passed on insufficient funds, or any assignee of that check casher, shall not be entitled to recover damages in any action brought pursuant to, or governed by, Section 1719. (g) For a transaction pursuant to Section 1789.33, a fee not to exceed fifteen dollars ($15) may be charged for the return of a dishonored check by a depositary institution. The fee may be collected by a check casher who holds a valid permit issued pursuant to Section 1789.37, when acting under the authority of that permit. (h) No amount in excess of the amounts authorized by this section shall be directly or indirectly charged by a check casher pursuant to a deferred deposit agreement. (i) Any person who violates any provision of this section shall be liable for a civil penalty not to exceed two thousand dollars ($2,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General in any court of competent jurisdiction. Any action brought pursuant to this subdivision shall be commenced within four years of the date on which the act or transaction upon which the action is based occurred. (j) A willful violation of this section is a misdemeanor. (k) Any person who is injured by any violation of this section may bring an action for the recovery of damages, an equity proceeding to restrain and enjoin those violations, or both. The amount awarded may be up to three times the damages actually incurred, but in no event less than the amount paid by the aggrieved consumer to a person subject to this section. If the plaintiff prevails, the plaintiff shall be awarded reasonable attorney's fees and costs. If a court determines by clear and convincing evidence that a breach or violation was willful, the court, in its discretion, may award punitive damages in addition to the amounts set forth above. SEC. 4. Section 1789.37 of the Civil Code is amended to read: 1789.37. (a) Every owner of a check casher's business shall obtain a permit from the Department of Justice to conduct a check casher's business. (b) All applications for a permit to conduct a check casher's business shall be filed with the department in writing, signed by the applicant if an individual or by a member or officer authorized to sign if the applicant is a corporation or other entity, and shall state the name of the business, the type of business engaged in, whether the applicant intends to enter into deferred deposit agreements, and the business address. Each applicant shall be fingerprinted. (c) Each applicant for a permit to conduct a check casher's business shall pay a fee not to exceed the cost of processing the application, fingerprinting the applicant, and checking or obtaining the criminal record of the applicant, at the time of filing the application. (d) Each applicant shall annually, beginning one year from the date of issuance of a check casher's permit, file an application for renewal of the permit with the department, along with payment of a renewal fee not to exceed the cost of processing the application for renewal and checking or obtaining the criminal record of the applicant. (e) The department shall deny an application for a permit to conduct a check casher's business, or for renewal of a permit, if the applicant has a felony conviction involving dishonesty, fraud, or deceit, provided the crime is substantially related to the qualifications, functions, or duties of a person engaged in the business of check cashing. (f) The department shall adopt regulations to implement this section, and shall determine the amount of the application fees required by this section. The department shall prescribe forms for the applications and permit required by this section, which shall be uniform throughout the state. SEC. 5. Section 22050 of the Financial Code is amended to read: 22050. (a) This division does not apply to any person doing business under any law of this state or of the United States relating to banks, trust companies, savings and loan associations, industrial loan companies, credit unions, small business investment companies, California business and industrial development corporations, or licensed pawnbrokers. (b) This division does not apply to a broker-dealer acting pursuant to a certificate, then in effect, issued pursuant to Section 25211 of the Corporations Code. (c) This division does not apply to a college or university making a loan for the purpose of permitting a person to pursue a program or course of study leading to a degree or certificate. (d) This division does not apply to a check casher who holds a valid permit issued pursuant to Section 1789.37 of the Civil Code when acting under the authority of that permit. SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. Notwithstanding Section 17580 of the Government Code, unless otherwise specified, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution.