BILL NUMBER: AB 1158 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 13, 2011
AMENDED IN ASSEMBLY MARCH 21, 2011
INTRODUCED BY Assembly Member Charles Calderon
FEBRUARY 18, 2011
An act to amend Section 23027 2
3035 of the Financial Code, relating to deferred deposit
transactions.
LEGISLATIVE COUNSEL'S DIGEST
AB 1158, as amended, Charles Calderon. Deferred deposit
transactions: advertising. transactions.
Existing law, the California Deferred Deposit Transaction Law,
provides for the licensure and regulation by the Commissioner of
Corporations of persons engaged in the business of making or
negotiating deferred deposit transactions, as defined. Existing law
prohibits a licensee from placing an advertisement
disseminated primarily in this state for a deferred deposit
transaction unless the advertisement discloses that the licensee is
licensed by the Department of Corporations. Existing law authorizes
the commissioner to require licensees to maintain a file of all
advertising copy for a period of 90 days from the date of its use and
requires the file to be made available to the commissioner upon
request authorizes a licensee to defer the deposit of
a customer's personal check for up to 31 days, prohibits
the face amount of the check from exceeding $300, and requires each
deferred deposit transaction to be made pursuant to a written
agreement . A willful violation of the California
Deferred Deposit Transaction Law is a crime.
This bill would prohibit a licensee from placing an
advertisement primarily intended to reach California residents,
including advertisements on the Internet, unless the advertisement
discloses that the licensee is licensed by the department, as
specified. The bill would also authorize the commissioner to require
licensees to maintain a file of all advertising copy currently in use
and to retain that advertising copy for a period of 2 years from the
date of its use instead authorize the face amount of
a check for a deferred deposit transaction to be up to $500 .
Because a willful violation of the these provisions by a licensee
would be a crime under the California Deferred Deposit Transaction
Law, the 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 no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 23035 of the
Financial Code is amended to read:
23035. (a) A licensee may defer the deposit of a customer's
personal check for up to 31 days, pursuant to the provisions of this
section. The face amount of the check shall not exceed three
five hundred dollars ($300)
($500) . Each deferred deposit transaction shall be made
pursuant to a written agreement as described in subdivision (e) that
has been signed by the customer and by the licensee or an authorized
representative of the licensee.
(b) A customer who enters into a deferred deposit transaction and
offers a personal check to a licensee pursuant to an agreement shall
not be subject to any criminal penalty for the failure to comply with
the terms of that agreement.
(c) Before entering into a deferred deposit transaction, licensees
shall distribute to customers a notice that shall include, but not
be limited to, the following:
(1) Information about charges for deferred deposit transactions.
(2) That if the customer's check is returned unpaid, the customer
may be charged an additional fee of up to fifteen dollars ($15).
(3) That the customer cannot be prosecuted in a criminal action in
conjunction with a deferred deposit transaction for a returned check
or be threatened with prosecution.
(4) The department's toll-free telephone number for receiving
calls regarding customer complaints and concerns.
(5) That the licensee may not accept any collateral in conjunction
with a deferred deposit transaction.
(6) That the check is being negotiated as part of a deferred
deposit transaction made pursuant to Section 23035 of the Financial
Code and is not subject to the provisions of Section 1719 of the
Civil Code. No customer may be required to pay treble damages if this
check does not clear.
(d) The following notices shall be clearly and conspicuously
posted in the unobstructed view of the public by all licensees in
each location of a business providing deferred deposit transactions
in letters not less than one-half inch in height:
(1) The licensee cannot use the criminal process against a
consumer to collect any deferred deposit transaction.
(2) The schedule of all charges and fees to be charged on those
deferred deposit transactions with an example of all charges and fees
that would be charged on at least a one-hundred-dollar ($100) and a
two-hundred-dollar ($200) deferred deposit transaction, payable in 14
days and 30 days, respectively, giving the corresponding annual
percentage rate. The information may be provided in a chart as
follows:
+-------------+------+-------------+---------+---------+
|Amount Amount of 14-day 30-day |
|Provided Fee Check APR APR |
+-------------+------+-------------+---------+---------+
|$100 XX XXX XXX XXX |
+-------------+------+-------------+---------+---------+
|$200 XX XXX XXX XXX |
+-------------+------+-------------+---------+---------+
(e) An agreement to enter into a deferred deposit transaction
shall be in writing and shall be provided by the licensee to the
customer. The written agreement shall authorize the licensee to defer
deposit of the personal check, shall be signed by the customer, and
shall include all of the following:
(1) A full disclosure of the total amount of any fees charged for
the deferred deposit transaction, expressed both in United States
currency and as an APR as required under the Federal Truth In Lending
Act and its regulations.
(2) A clear description of the customer's payment obligations as
required under the Federal Truth In Lending Act and its regulations.
(3) The name, address, and telephone number of the licensee.
(4) The customer's name and address.
(5) The date to which deposit of check has been deferred (due
date).
(6) The payment plan, or extension, if applicable as allowed under
subdivision (c) of Section 23036.
(7) An itemization of the amount financed as required under the
Federal Truth In Lending Act and its regulations.
(8) Disclosure of any returned check charges.
(9) That the customer cannot be prosecuted or threatened with
prosecution to collect.
(10) That the licensee cannot accept collateral in connection with
the transaction.
(11) That the licensee cannot make a deferred deposit transaction
contingent on the purchase of another product or service.
(12) Signature space for the customer and signature of the
licensee or authorized representative of the licensee and date of the
transaction.
(13) Any other information that the commissioner shall deem
necessary by regulation.
(f) The notice required by subdivision (c) shall be written and
available in the same language principally used in any oral
discussions or negotiations leading to execution of the deferred
deposit agreement and shall be in at least 10-point type.
(g) The written agreement required by subdivision (e) shall be
written in the same language principally used in any oral discussions
or negotiations leading to execution of the deferred deposit
agreement; shall not be vague, unclear, or misleading and shall be in
at least 10-point type.
(h) Under no circumstances shall a deferred deposit transaction
agreement include any of the following:
(1) A hold harmless clause.
(2) A confession of judgment clause or power of attorney.
(3) Any assignment of or order for payment of wages or other
compensation for services.
(4) Any acceleration provision.
(5) Any unconscionable provision.
(i) If the licensee sells or otherwise transfers the debt at a
later date, the licensee shall clearly disclose in a written
agreement that any debt or checks held or transferred pursuant to a
deferred deposit transaction made pursuant to Section 23035 are not
subject to the provisions of Section 1719 of the Civil Code and that
no customer may be required to pay treble damages if the check or
checks are dishonored.
SECTION 1. Section 23027 of the Financial Code
is amended to read:
23027. (a) No licensee shall advertise, print, display, publish,
distribute, or broadcast, or cause or permit to be advertised,
printed, displayed, published, distributed or broadcast, in any
manner, any statement or representation with regard to the business
subject to the provisions of this division, including the rates,
terms, or conditions for making or negotiating deferred deposit
transactions, that is false, misleading, or deceptive, or that omits
material information that is necessary to make the statements not
false, misleading, or deceptive.
(b) No licensee shall place an advertisement disseminated
primarily in this state for a deferred deposit transaction or
primarily intended to reach California residents, including
advertisements on the Internet, unless the licensee, in the printed
text of the advertisement or the oral text in the case of a radio or
television advertisement, makes the following disclosure:
"Insert name of licensee] is licensed by the Department of
Corporations pursuant to the California Deferred Deposit Transaction
Law."
(c) The commissioner may require that rates of charges or fees, if
stated by the licensee, be stated fully and clearly in the manner
that the commissioner deems necessary to give adequate information
to, or to prevent misunderstanding by, prospective customers.
(d) No advertising copy shall be used after its use has been
disapproved by the commissioner and the licensee is notified in
writing of the disapproval.
(e) The commissioner may require licensees to maintain a file of
all advertising copy currently in use and to retain that advertising
copy for a period of two years from the date of its use. The file
shall be available to the commissioner upon request.
SEC. 2. 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.