BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 75|
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THIRD READING
Bill No: AB 75
Author: Hill (D)
Amended: 6/10/11 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 5-2, 6/6/11
AYES: Price, Corbett, Hernandez, Negrete McLeod, Vargas
NOES: Emmerson, Wyland
NO VOTE RECORDED: Correa, Walters
SENATE JUDICIARY COMMITTEE : 4-0, 6/21/11
AYES: Evans, Blakeslee, Corbett, Leno
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 67-4, 5/12/11 - See last page for vote
SUBJECT : Documents: notaries public: solicitations
SOURCE : Author
DIGEST : This bill specifies requirements for
solicitations that could be construed or interpreted as
involving a governmental entity and makes changes to the
law governing notaries public.
ANALYSIS : Existing law:
1. Makes it unlawful for a nongovernmental entity to
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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 and duties that by the law,
may be performed by notaries.
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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 Secretary of State (SOS) is
authorized to charge for the provision of specified
business services.
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
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government agency it shall be rendered, or how the
solicited funds or membership fees will be used, as
applicable.
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.
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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 for the purpose of harassing
or defrauding a person or entity.
14.Makes technical, conforming changes.
Background
There are many unscrupulous businesses that reach out to
consumers and business owners, offering to provide services
as a third party between the consumer or business owner and
a government entity. Some even go so far as to mail
solicitations to consumers and business owners which are
disguised as government forms or documents requiring
payment. The majority of these entities target consumers
and businesses with mandatory registrations or document
filings with government entities such as homeowners filing
property tax exemptions with a local county assessor's
office or businesses filing limited liability company
documents with the SOS. Examples of misleading statements
include representations that a fee is required in order to
receive a homeowners' exemption, or that the advertised
service is connected with any government entity. One
specific example highlighted by the SOS involved letters
sent to California corporations directing them to submit
$495 and a completed form to a private company named
"Business Filings Division" in order to dissolve their
business entity.
In one more publicized recent example of deceptive
solicitations, a San Diego County man plead guilty to
charges of conspiracy to commit wire fraud and money
laundering connected to his creation of a business
specifically designed to fraudulently sell loan
modification services to homeowners who were delinquent in
their monthly mortgage payments. The company mailed
solicitations throughout the county advising homeowners
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that it employed highly trained staff and had a direct
connection to the US Treasury. Over 300 homeowners paid
between $2,500 and $3,000 to the company between April and
July 2009, which was used to continue to operate the
company and pay its principals and did not result in any
services to homeowners.
In response to consumer and business complaints about
deceptive solicitations, the SOS dedicated a webpage to
inform consumers about these mailings and clarify, "the
requests are not being made by the California Secretary of
State's office and are not being made by or on behalf of
any governmental entity. Although a business entity can
use an intermediary to submit filings and fees to our
office, no business is required to go through another
company in order to file its documents with the Secretary
of State's office."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 7/11/11)
California Association of Realtors
Capitol Corporate Services, Inc.
Highland Area Chamber of Commerce
Law Offices of Harold S. Small
Long Beach Area Chamber of Commerce
Secretary of State Debra Bowen
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
Thoits Insurance Service
TriMark Economy Restaurant Fixtures
Turner, Aubert and Friedman, LLP
ARGUMENTS IN SUPPORT : According to the author, this bill
strengthens the law to prevent deceptive business
solicitations and reduces the potential for document fraud
by closing significant loopholes affecting notary services
and solicitation disclosures.
According to information provided by the author and SOS,
the Attorney General of California has received well over
10,000 complaints from the public about these deceptive
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government-look-a-like forms and cites one lawsuit brought
by the Attorney General, the defendants were charged with
sending out 986,000 misleading solicitations. This bill
will put a stop to this practice by requiring third party
vendors to put larger, more obvious disclaimers on their
solicitations to make it clear they are not government
documents. It also increases the penalty for failing to
put disclaimers on the solicitations. These clarifications
will provide businesses receiving these misleading
solicitations with a more readily recognizable disclaimer,
as well as make this type of deceptive practice easier to
prosecute and eliminate.
The author also believes it is important to give the SOS
the authority to refuse to process documents that are
clearly intended for fraudulent purposes. When a notarized
document is presented to the SOS for a certificate of
authentication, the SOS is only permitted to determine the
authenticity of the notary public's signature, not the
authenticity of the underlying document. If the notary
signature is valid, the SOS must authenticate the notary
public's signature. Once the SOS 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
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
author believes the likelihood of these occurrences will
decrease.
Additionally, the author sees benefit in prohibiting the
use of a subscribing witness when establishing a power of
attorney. Currently, if a person has signed a document,
but does not personally appear before a notary public,
another person can appear on their behalf to attest that
the principal signer signed the document. The person
appearing on behalf of the principal is called a
subscribing witness. Although existing law prevents a
subscribing witness from being used as proof of signing on
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specific real property documents to be recorded, they can
be used in the proof of signing of a power of attorney
document that could later be used to fraudulently sign
multiple real property deeds or impact all aspects of a
person's estate.
ASSEMBLY FLOOR : 67-4, 5/12/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Carter, Chesbro,
Cook, Davis, Dickinson, Eng, Feuer, Fong, Fuentes,
Furutani, Galgiani, Gatto, Gordon, Grove, Hagman,
Halderman, Hall, Harkey, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Jeffries, Lara, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Mitchell, Monning,
Morrell, Nestande, Nielsen, Norby, Olsen, Pan, Perea, V.
Manuel P�rez, Silva, Skinner, Smyth, Solorio, Swanson,
Valadao, Wagner, Wieckowski, Williams, Yamada, John A.
P�rez
NOES: Donnelly, Fletcher, Beth Gaines, Jones
NO VOTE RECORDED: Charles Calderon, Cedillo, Conway,
Garrick, Gorell, Knight, Mansoor, Portantino, Torres
JJA:kc 7/11/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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