SB 300 Senate Bill - INTRODUCED

BILL NUMBER: SB 300	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Mendoza

                        FEBRUARY 23, 2015

   An act to amend Sections 21201, 21201.5, and 21208 of, and to add
Section 21201.6 to, the Financial Code, relating to pawnbrokers.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 300, as introduced, Mendoza. Pawnbrokers: regulations.
   Existing law regulates pawnbrokers and requires a written contract
for every loan by a pawnbroker for which goods are received in
pledge as security, as specified, and requires a copy of that
contract to be furnished to the borrower.
   This bill would permit the requirement for a written contract to
be met electronically, provided that the contract and transaction
comply with the provisions of the Uniform Electronic Transactions Act
and meet certain disclosure requirements.
   Existing law requires a pawnbroker, within one month after the
loan period expires, to notify the borrower at his or her last known
address of the termination of the loan period, by a means for which
verification of mailing or delivery of the notification can be
provided by the pawnbroker, and provides for extending the right of
redemption for a period of 10 days from the date that notice is
mailed.
   This bill would instead require the pawnbroker to provide that
notification to the pledgor at his or her last known mailing or
electronic address, by a means for which verification of mailing or,
at the sole option of the pledgor, electronic transmission of the
notification can be provided by the pawnbroker, as specified.
   Existing law permits a pledgor and a pawnbroker to agree to a new
loan to become effective at the end of the loan period and requires
the new loan to be processed as a new loan subject to loan
origination, storage, and other fees as specified.
   This bill would permit a replacement loan to be issued at the
request of the pledgor with consent of the pawnbroker before the
expiration of the redemption period, to become effective on the date
it is issued, subject to specified procedures.
   Existing law requires a pawnbroker to comply with the reporting
requirements imposed on secondhand dealers, including the requirement
to obtain and report the customer's fingerprint.
   This bill would require a pawnbroker who has issued a loan
electronically, instead of obtaining and reporting the customer's
fingerprint, to electronically deposit the loan proceeds into a
deposit account held in the name of the pledgor, as specified.
   Because a knowing violation of these provisions would be a crime,
this bill would impose a state-mandated local program.
   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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  It is the intent of the Legislature to permit the
citizens of California the ability to transact pawn or collateral
loans in an efficient and expeditious manner wherever they may be
located. It is further the intent of the Legislature to permit such
loans to be made in conformity with the Uniform Electronic
Transactions Act, as set forth in Title 2.5 (commencing with Section
1633.1) of Part 2 of Division 3 of the Civil Code.
  SEC. 2.  Section 21201 of the Financial Code is amended to read:
   21201.   (a)    Every loan made by a pawnbroker
for which goods are received in pledge as security shall be evidenced
by a written contract, a copy of which shall be furnished to the
 borrower.   pledgor.  The loan contract
shall provide a four-month loan period, shall set forth the loan
period and the date on which the loan is due and payable, and shall
clearly inform the  borrower   pledgor  of
his or her right to redeem the pledge during the loan period.

    Every 
    (b)     Every  loan contract shall
contain the following notice, in at least 8-point boldface type and
circumscribed by a box, immediately above the space for the 
borrower's   pledgor's  signature:

   "You may redeem the property you have pledged at any time until
the close of business on ____  fill in date  no fewer than
 four months from date loan begins]. To redeem, you must pay the
amount of the loan and the applicable charges which have accrued
through the date on which you redeem."

    Every
    (c)     Every  pawnbroker shall retain
in his or her possession every article pledged to him or her for a
period of four months. During such period the  borrower
  pledgor  may redeem the articles upon payment of
the amount of the loan and the applicable charges. If the 
borrower   pledgor  and the pawnbroker agree in
writing that the pawned property may be stored off premises,
following the request for redemption of the loan, the pawnbroker
shall return the pledged property to the consumer the next calendar
day when both the pawnbroker's store and the storage facility are
open, not to exceed two business days. 
    If 
    (d)     If  any pledged article is not
redeemed during the four-month loan period as provided herein, and
the  borrower   pledgor  and pawnbroker do
not mutually agree in writing to extend the loan period, the
pawnbroker shall notify the  borrower   pledgor
 within one month after expiration of the loan period. If the
pawnbroker fails to notify the  borrower  
pledgor  within one month after the expiration of the loan
period, the pawnbroker shall not charge interest from the day after
the expiration of the one-month period. The pawnbroker shall notify
the  borrower   pledgor  at his or her last
known  mailing or electronic  address of the termination of
the loan period, by a means for which verification of mailing
 or delivery   or, at the sole option of the
pledgor, electronic transmission  of the notification can be
provided by the pawnbroker, and extending the right of redemption,
during posted business hours, for a period of 10 days from date of
mailing  or electronic transmission  of that notice. The
10-day notice shall  include a statement that:  
state, in substantially the same forma   t as the
following:  "If the tenth day falls on a day when the pawnshop
is closed, the time period is extended to the next day that the
pawnshop is open." 
    However, 
    (e)     However,  the posted schedule
of charges required pursuant to Section 21200.5 shall contain a
notice informing the  borrower   pledgor 
that if he or she desires, the pawnbroker shall send the notice of
termination of the loan period by registered or certified mail with
return receipt requested, upon prepayment of the mailing costs.
 If 
    (f)     If  any pledged article is not
redeemed within the 10-day notice period, the pawnbroker shall
become vested with all right, title, and interest of the pledgor, or
his or her assigns, to the pledged article, to hold and dispose of as
his or her own property. Any other provision of law relating to the
foreclosure and sale of pledges shall not be applicable to any pledge
the title to which is transferred in accordance with this section.
 The 
    (g)     The pawnbroker shall not sell
any article of pledged property until he or she has become vested
with the title to that property pursuant to this section. The sale of
pledged property is a misdemeanor pursuant to Section 21209.
  SEC. 3.  Section 21201.5 of the Financial Code is amended to read:
   21201.5.   A   (a)    
During the contractual loan period and any extension thereof, a 
pledgor may request, and a pawnbroker may consent to, a  new
  replacement  loan to take effect upon 
or at any time after  the expiration of the loan period
stated in the  original   active  loan
contract delivered to the pledgor under Section 21201  or this
section  .  The pledgor shall pay in cash or another
form acceptable to the pawnbroker all of the charges and interest due
under the original loan, and the remaining unpaid balance of the
actual amount borrowed under the original loan shall be debited to
the new loan on which the same article or articles are pledged. The
loan to which the debit is applied shall be processed as a new loan
and shall be deemed to be a new loan subject to loan origination
fees, storage fees, and other fees permitted by this chapter, when
applicable. The new loan contract required by Section 21201 shall
disclose the amount of the original loan that is debited to the new
loan.  
   (b) A replacement loan may also issue upon the request of the
pledgor and the consent of the pawnbroker prior to the expiration of
the grace period provided by Section 21201. This replacement loan
shall become effective on the date it is issued.  
   (c) All of the following shall apply to a replacement loan issued
pursuant to this section:  
   (1) The loan shall be processed as, and deemed to be, a new loan
subject to all other fees and charges permitted by this chapter.
 
   (2) The pledgor's consent to the terms of any replacement loan
shall be deemed given when he or she executes the written replacement
loan in person or electronically in conformity with the provisions
of Section 21201.6, and pays in cash or another form acceptable to
the pawnbroker all of the charges and interest due under the prior
loan or if all of the following conditions are met:  
   (A) The pledgor pays off all outstanding charges from the prior
loan then due, including interest, and any loan writing, storage,
notification, or other fee authorized in this chapter in cash or
another form acceptable to the pawnbroker. The pledgor's payment may
be delivered to the pawnbroker by any method, including, but not
limited to, United States mail, private mail, a personal
representative, or electronic transfer, provided that manner of
payment is acceptable to the pawnbroker. If insufficient payment is
tendered by the pledgor or is tendered in a form unacceptable to the
pawnbroker, the pawnbroker shall, if commercially reasonable, return
the payment in the same manner that the payment was delivered by the
pledgor or by another commercially reasonable manner within five
business days and shall include a statement advising the pledgor the
reason the payment was rejected. The pawnbroker is under no
obligation to enter into a replacement loan if the amount is
insufficient or the form of payment or method of tender is
unacceptable to the pawnbroker.  
   (B) If the replacement loan is executed other than pursuant to
Section 21201.6, the principal amount of the replacement loan is
equal to or less than the principal amount of the prior loan. 

   (C) The terms of the replacement loan are consistent with this
chapter on the date the replacement loan is issued.  
   (D) The replacement loan is evidenced by a written agreement or
electronic record and a paper or electronic copy is mailed or
otherwise transmitted to the pledgor within five business days
following receipt of payment by the pawnbroker by a means for which
verification of mailing or transmittal can be provided by the
pawnbroker.  
   (3) The unpaid balance of the prior loan shall be debited to the
replacement loan on which the same article or articles have been
pledged. The replacement loan shall disclose the amount of the prior
loan that is debited and shall otherwise be consistent with Section
21201. 
  SEC. 4.  Section 21201.6 is added to the Financial Code, to read:
   21201.6.  The requirement for a written contract signed by the
pledgor as set forth in Sections 21201 and 21201.5 may be met
electronically if all of the following conditions are satisfied:
   (a) The contract and transaction comply with the provisions of the
Uniform Electronic Transactions Act, as set forth in Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, as may be applicable at the time that the loan is entered into
between the pawnbroker and the pledgor.
   (b) Any written disclosures specified in this chapter to be set
forth in a specified minimum font size are conspicuously presented to
the pledgor prior to his or her execution of the electronic
contract.
   (c) The pawnbroker makes one of the following disclosures:
   (1) If the principal loan amount is below two thousand five
hundred dollars ($2,500), the pawnbroker discloses the maximum
compensation due a pawnbroker as set forth in Section 21200.7 prior
to the pledgor's execution of the electronic agreement.
   (2) If the principal loan amount is two thousand five hundred
dollars ($2,500) or more, the pawnbroker discloses the provisions of
Sections 21051 and 22054 prior to the pledgor's execution of the
electronic agreement.
  SEC. 5.  Section 21208 of the Financial Code is amended to read:
   21208.   A   (a)     Except
as provided in subdivision (b), a  pawnbroker shall comply with
the reporting requirements imposed on secondhand dealers under
Article 4 (commencing with Section 21625) of Chapter 9 of Division 8
of the Business and Professions Code. 
   (b) A pawnbroker who has issued a loan electronically pursuant to
Section 21201.6 shall, in lieu of obtaining and reporting the
customer's fingerprint as set forth in subdivision (g) of Section
21628 of the Business and Professions Code, electronically deposit
the loan proceeds into a deposit account held in the name of the
pledgor at a bank, savings and loan, or credit union located in the
United States. 
  SEC. 6.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B 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 XIII B of the California
Constitution.