BILL ANALYSIS �
SB 586
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Date of Hearing: June 27, 2011
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Mike Eng, Chair
SB 586 (Pavley) - As Amended: May 27, 2011
SENATE VOTE : 25-14
SUBJECT : Banks and credit unions: signature stamps.
SUMMARY : Restricts the issuance of signature stamps by state
chartered banks and credit unions and increases the fines
associated with certain elder abuse violations Specifically,
this bill :
1)Defines "signature stamp" as a rubber or other synthetic stamp
or device that is used to accurately imitate the signature of
an individual.
2)Provides that a bank or credit union shall only issue a
signature stamp to an existing accountholder if either:
a) The accountholder is present to request the stamp and an
employee of the bank or credit union witnesses and
acknowledges in writing that the signature stamp was
requested by the stamp holder; or,
b) The account holder is physically unable to come into the
bank or credit union due to disability, the accountholder
provides a letter from a physician attesting to the
physical limitations and the accountholders signature has
been notarized on a form approved and issued by the bank.
3)Requires a bank or credit union that issues a signature stamp
to an account holder to inform the account holder of the risks
associated with the loss, theft, or misuse of the signature
stamp, and his or her rights and responsibilities as a stamp
holder, including, but not limited to, the responsibility to
review the account frequently and report unauthorized
transactions, or report lost or stolen signature stamps as
quickly as possible.
EXISTING LAW
1)Allows a mark to be affixed as a signature for a person who
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cannot write, as long as it is witnessed and signed by the
witness(es) to the mark (Civil Code Section 14, Code of Civil
Procedure Section 17, Corporations Code Section 17, Elections
Code Section 354.5, Financial Code Section 17, Fish and Game
Code Section 81, Government Code Section 16, Harbors and
Navigation Code Section 18, Labor Code Section 17, Military
and Veterans Code Section 17, Penal Code Section 7, Public
Resources Code Section 17, Public Utilities Code Section 16,
Revenue and Taxation Code Section 18, Streets and Highways
Code Section 18, Unemployment Insurance Code Section 17,
Vehicle Code Section 17, Water Code Section 17, and Welfare
and Institutions Code Section 17).
2)Any person, who has assumed full or intermittent
responsibility for the care or custody of an elder or
dependent adult, whether or not he or she receives
compensation, or any elder or dependent adult care custodian,
health practitioner, clergy member, or employee of a county
adult protective services agency or a local law enforcement
agency, is a mandated reporter. Any one of these individuals,
who observes or has knowledge of an incident that reasonably
appears to be physical abuse, abandonment, abduction,
isolation, financial abuse, or neglect, or who is told by an
elder or dependent adult that he or she has experienced
behavior constituting physical abuse, abandonment, abduction,
isolation, financial abuse or neglect, or who reasonably
suspects that abuse, must report the known or suspected
instance of abuse by telephone immediately or as soon as
reasonably practicable, and in writing within two working
days, as specified (Welfare and Institutions Code Section
15630).
3)In addition to the provision described above, until January 1,
2013, California's Elder and Dependent Adult Financial Abuse
Reporting Act requires all officers and employees of financial
institutions to act as mandated reporters of elder and
dependent adult financial abuse, as specified (Welfare and
Institutions Code Sections 15630.1, 15633, 15634, 15640, and
15655.5).
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis, The Department of Financial Institutions
indicates minor, absorbable costs.
COMMENTS :
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According to the author,
This bill is needed to help prevent elder and dependent
adult abuse in all of its forms. The financial and
physical abuse of elder and dependent adults is an
insidious and growing problem in California and across the
United States. Unfortunately, with the explosion of
online, telephonic and other non-traditional forms of
banking and financial activity, financial fraud and other
abuse schemes against elders and disabled individuals who
need assistance with the maintenance of their financial
concerns has become easier.
For example, as has happened in Senator Pavley's district,
a caretaker or family member could steal or otherwise
fraudulently use a rubber signature stamp to withdraw or
transfer funds from an elder or dependent adult's bank
account. This is just one example of the myriad ways in
which a signature stamp, in the wrong hands, can be
fraudulently used to rob elder and dependent adults of
their hard earned assets.
In light of the growing need to protect our aging
population, this measure is focused on providing consumers
with information and establishing basic protections against
the fraudulent use of signature stamps which are often used
for banking purposes by individuals with physical
limitations. This is one type of fraud among many; however
it is part of an epidemic of financial abuse that will be
facing our aging and dependent adult population in the
years to come. Additionally, this bill seeks to deter all
elder and dependent adult abuse by increasing fines
associated with these crimes. Finally, in light of the
structural budget deficit in California and the
accompanying budget cuts of the last several years, it is
equally crucial that funding be maintained for those
agencies that investigate and prevent elder and disabled
abuse wherever possible. This bill seeks to allocate the
increase in fine monies to County Adult Protective Services
agencies for prevention and investigation.
Though it is difficult to determine exact rates of elder
and dependent abuse since it is a highly underreported
crime, the National Center on Elder Abuse (NCEA) indicates
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that a large percentage of substantiated reports of
mistreatment of older adults are financial exploitation, a
percentage that is expected to grow as the baby boomer
generation grows older and our society ages in the years
and decades to come. It is therefore incumbent upon the
Legislature to act wherever possible to establish basic
safeguards, and to thwart specific avenues of potential
abuse wherever it is reasonable to do so in a manner that
is least restrictive on individuals.
Committee staff is unable to determine the statistical usage of
signature stamps via empirical data. Anecdotal information
reveals that few banks or credit unions offer this service, nor
do customers use them often for personal accounts. As revealed
in the Senate Banking and Financial Institutions Committee
analysis, "Disability Rights CA estimates that approximately
30,000 disabled persons in California (1% of the disabled
population) possess signature stamps."
Most often, signature stamps are used by business account
holders.
This bill seeks to regulate the use of these stamps by ensuring
that a bank employee witnesses and acknowledges in writing that
the stamp was requested by the physically present account
holder. If the account holder cannot be present, then they
would need to provide the institutions with a physician signed
letter attesting to any physical limitations and that the
account holder's signature is notarized. Furthermore, if an
institution issues a signature stamp they must also inform the
account holder of the risk associated with the loss, theft, or
misuse of the stamp.
This bill also increases the monetary penalties for various
crimes against elders or dependent adults. Since this bill is
double referred to Assembly Public Safety, the need for
increasing these penalties will not be discussed.
Signature stamps can be acquired from numerous sources other
than financial institutions. This bill would not address the
interaction between a customer and a financial institutions if
the customer used a signature stamp acquired from somewhere
other than the bank or credit union. Additionally, the
requirements on banks and credit unions do not address the
actual usage of the stamp, only its issuance.
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Finally, the restrictions on the issuance of these signature
stamps would only apply to California chartered banks and credit
unions, meaning that customers banking with national banks
(Wells Fargo, Bank of America, Chase, etc) would not have the
same protections.
REGISTERED SUPPORT / OPPOSITION :
Support
AARP - sponsor
AFSCME
Area Agency on Aging Advisory Council
Alzheimer's Association
California Alliance for Retired Americans (CARA)
California School Employees Association, AFL-CIO
California Senior Legislature (CSL)
Congress of California Seniors (CCS)
Consumer Attorneys of California
County Welfare Directors Association (CWDA)
Disability Rights California
Los Angeles County Board of Supervisors
San Francisco Aging & Adult Services Commission
San Francisco Department of Aging & Adult Services Advisory
Council
San Joaquin County Commission on Aging
Ventura County Board of Supervisors
Opposition
California Bankers Association (CBA)
California Independent bankers (CIB)
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081