BILL ANALYSIS �
AB 75
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Date of Hearing: April 5, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 75 (Hill) - As Introduced: December 22, 2010
SUBJECT : Documents: notaries public: solicitations.
SUMMARY : Revises current provisions of laws pertaining to
solicitations and public notaries, and authorizes the Secretary
of State (SOS) to refuse to perform a service or refuse a filing
based on a reasonable belief that the service or filing is
fraudulent, as specified. Specifically, this bill :
1)Expands existing prohibitions on nongovernmental entities
implying a governmental connection for solicitation purposes
to federal entities, as specified.
2)Requires the disclosures on solicitations to be conspicuously
displayed in certain locations, type, and manner, as
specified.
3)Prohibits the use of a title, trade, or brand name in a
solicitation that could be reasonably interpreted or construed
as implying any federal, state, or local government
connection, approval, or endorsement, including, but not
limited to the following terms: "agency;" "administrative;"
"assessor;" "board;" "bureau;" "collector;" "commission;"
"committee;" "department;" "division;" "recorder;" "unit;"
"federal;" "state;" "county;" "city;" or "municipal;" or, the
name or division of any governmental agency.
4)Prohibits the specification of a date or time period when
payment to the soliciting nongovernmental person, firm,
corporation, or association is due, including but not limited
to the following terms: "due date;" "due now;" "remit by;"
"remit immediately;" "payment due'" "pay now;" "pay
immediately;" or, "pay no later than" unless the solicitation
displays in the same sentence as the date or time period
specified how the information being solicited will be used, a
description of the product or service that is to be provided
and to what government agency it shall be rendered, or how the
solicited funds or membership fees will be used, as
applicable.
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5)Prohibits stating or implying in a solicitation that a payment
to the nongovernmental entity is mandatory, required by law,
or that penalties, fines or consequences will occur if payment
is not made to the soliciting nongovernmental entity.
6)Makes a violation of the above requirements a misdemeanor
punishable by imprisonment in a county jail not exceeding six
months, or by a fine not exceeding $2,500, or by both a fine
and imprisonment.
7)States that a person harmed as a result of the violation of
this bill is entitled to recover, in addition to any other
available remedies, damages in an amount equal to three times
the amount solicited.
8)Defines "conspicuous" or "conspicuously" to mean displayed
apart from other print on the page, envelope, outside cover,
or wrapper and in not less than 12-point boldface font type in
capital letters that is at least 2-point boldface font type
sizes larger than the next largest print on the page, envelope
outside cover, or wrapper and in contrasting type, layout,
font, or color in a manner that clearly calls attention to the
language.
9)Adds a power of attorney to the types of instruments for which
a proof of the execution is prohibited and prohibits a proof
of the execution for any instrument requiring a notary public
to obtain a thumbprint from the party signing the document in
the notary public's journal.
10)Revises the form of certificate that may be used for proof of
execution.
11)Specifies that certain provisions of existing law apply only
to a notary public employed by a financial institution.
12)Deletes the prescribed maximum fees a notary public may
charge for specified services.
13)Authorizes SOS to refuse to perform a service or refuse a
filing based on a reasonable belief that the service or filing
is being requested for an unlawful, false, or fraudulent
purpose, to promote or conduct an illegitimate object or
purpose, or is being requested or submitted in bad faith or
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for the purpose of harassing or defrauding a person or entity.
14)Makes technical, conforming changes.
EXISTING LAW :
1)Makes it unlawful for a nongovernmental entity to solicit
funds or information by means of mailing, electronic message,
or Internet Web site that contains a seal, insignia, trade, or
brand name, or any other term or symbol that reasonably could
be interpreted or construed as implying any state or local
governmental connection, approval, or endorsement, as
specified.
2)Requires a business to include the contact information for a
referenced governmental agency in an unsolicited mailing that
offers to assist the recipient in dealing with the
governmental agency and makes a violation of these or other
provisions related to advertising a misdemeanor, punishable by
imprisonment in the county jail not exceeding six months, a
fine not exceeding $1,000, or both.
3)Makes it unlawful for a person to make any untrue or
misleading statements in any manner in connection with the
offering or performance of an assessment reduction filing
service.
4)Provides that an untrue or misleading statement includes
representing that an offeror of an assessment reduction filing
service is, or is affiliated with, any governmental entity by,
among other things, the use of a business name including the
word "appeal" or "tax" and any of a list of terms, including
"agency," "bureau," or "department."
5)Authorizes proof of the execution of an instrument by certain
persons and prescribes the form for that proof.
6)Prohibits a proof of the execution of any of several types of
specified instruments, including a grant deed, mortgage, deed
of trust, quitclaim deed, or security agreement.
7)Prescribes the duties of a notary public, including the duty
to demand acceptance and payment of foreign and inland bills
of exchange, or promissory notes, to protest them for
nonacceptance or nonpayment, and to exercise any other powers
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and duties that by the law, may be performed by notaries.
8)Provides that a protest is a certificate of dishonor made by a
United States consul or vice consul, or a notary public or
other person authorized to administer oaths by the law of the
place where dishonor occurs.
9)Prescribes the maximum fees a notary public may charge for
specified services.
10)Establishes the fees SOS is authorized to charge for the
provision of specified business services.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "Over
the past few years, deceptive solicitation schemes have arisen
to take advantage of the statutorily required filings with the
SOS's office. The misleading solicitations sent to companies
sometimes appear to be official government documents and imply
that the company must pay an exorbitant fee in order to file the
documents with the SOS. In many cases the solicitations
threaten penalties if the company does not file with the third
party entity, though businesses are not required to do so.
"Under current law, false documents can easily be notarized and
submitted to the SOS for processing. When a notarized document
is presented to the SOS, the Secretary is only permitted to
determine the authenticity of the notary public signature, not
the underlying authenticity of the document. If the notary
signature is valid, the SOS must authenticate the notary's
signature. After verifying the signature, the SOS must attach
its seal to the document, which makes the document appear
authentic, though the underlying statements have not been
verified.
"The Attorney General's office has tracked more than 50 entities
engaged in this type of ploy and has received over 10,000
complaints from the public about these government look-a-like
forms and threats. In one lawsuit brought by the Attorney
General's office, the defendants sent out 986,000 misleading
solicitations by mail."
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Background . According to information provided by the author,
bogus documents are often notarized and submitted to the SOS for
processing. When a notarized document is presented to the SOS
for authentication, the SOS is only permitted to determine the
authenticity of the notary public's signature and seal, not the
authenticity of the underlying document. Once the SOS's
certificate is attached to a document, even if the underlying
document is not authentic, it can be used to harass people with
false financial claims and to obtain fraudulent identification
indicating diplomatic immunity. Other entities may view the
SOS's certificate as proof that the underlying documents are
valid, rather than simply an authentication of the notary
public's signature and seal.
A "subscribing witness" is a person who witnesses the signing of
a document and appears before a notary public on behalf of the
principal signer to attest that the principal signer has signed
the document. Although current law prevents the use of a
subscribing witness as proof of signing on specific real
property documents, a subscribing witness can currently be used
when notarizing a power of attorney document that could be later
used to fraudulently sign multiple real property deeds or other
estate documents.
A "protest" is a written statement by a notary public, or other
official authorized to administer oaths, identifying a
negotiable instrument, and certifying that it was presented for
payment or the reason why the instrument was not presented for
payment, and that the negotiable instrument was not accepted or
paid. Examples of negotiable instruments include a check or
promissory note. The failure to pay after presentment is called
a "dishonor." The purpose of the protest is to serve as a
formal statement of dishonor and to initiate the formal process
required to begin civil proceedings to secure payment for the
negotiable instrument that has been dishonored.
Notaries public are currently required to perform "protests" and
issue certificates of dishonor related to nonpayment of
negotiable instruments, such as a check or promissory note. The
protest can then be used to begin civil legal proceedings.
According to information provided by the author, this protest
procedure is archaic and is seldom performed for legitimate
purposes. Bogus protests have been used in tax evasion schemes,
as well as to harass people and entities with false financial
claims.
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This bill is a reintroduction of AB 898 (Lieu) and AB 2654
(Hill) of 2010, which were vetoed. In his veto message of both
bills, the Governor cited concern over the inclusion of a
private right of action. This bill contains the private right
of action, authorizing the recovery of an amount equal to three
times the amount solicited.
Support . The SOS writes in support, "Once the SOS's certificate
is attached to the document, if the underlying document is not
authentic (often referred to as 'bogus') it can be used to file
false financial claims against people and to obtain fraudulent
identification implying that the holder of the document has
diplomatic immunity from prosecution. Other entities in receipt
of the documents may view the SOS's certificate as proof that
the underlying documents are valid rather than simply as an
authentication of the notary public's signature. By providing
the SOS the discretion to refuse a filing that is unlawful,
false or fraudulent, the likelihood of these occurrences will
decrease."
Previous legislation .
AB 898 (Lieu) of 2010, revises current provisions of laws
pertaining to solicitations and public notaries. This bill was
vetoed.
AB 2654 (Hill) of 2010, specifies requirements for solicitations
that could be construed or interpreted as involving a state or
federal governmental entity, including certain disclosures on
the front and back of every page of the solicitation and the
envelope; and, establishes penalties for violating specified
disclosure requirements and makes various technical changes.
This bill was vetoed.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Realtors
Highland Area Chamber of Commerce
Long Beach Area Chamber of Commerce
Secretary of State Debra Bowen
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
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Opposition
None on file.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301