California Assembly Bill AB2511 Latest Draft

 BILL NUMBER: AB 2511AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 25, 2010 INTRODUCED BY Assembly Member Skinner FEBRUARY 19, 2010  An act to amend Section 1789.35 of the Civil Code, and to amend Section 23036 of the Financial Code, relating to check fees.   An act to add Chapter 2.5 (commencing with Sect   ion 23040) to Division 10 of the Financial Code, relating to deferred deposit transactions.  LEGISLATIVE COUNSEL'S DIGEST AB 2511, as amended, Skinner.  Check fees.   Deferred deposit transactions: recipients of unemployment benefits.   Existing law, the California Deferred Deposit Transaction Law, prohibits a person from offering, originating, making, or arranging a deferred deposit transaction without first obtaining a license from the Commissioner of Corporations. Existing law authorizes a licensee to defer the deposit of a customer's personal check for up to 31 days and prohibits the face amount of the check from exceeding $300. Existing law prohibits a fee for a deferred deposit transaction from exceeding 15% of the face amount of the check and prohibits a licensee from directly or indirectly charging other fees, except as specified. Existing law makes a willful violation of these provisions a crime.   This bill would prohibit a licensee from offering, originating, or making a deferred deposit transaction, arranging a deferred deposit transaction for, or acting as an agent for, a deferred deposit originator, or, making, offering, brokering, or assisting a deferred deposit originator or customer in the origination of a deferred deposit transaction in California to a person who is receiving unemployment benefits, as defined, unless the interest charged on the deferred deposit transaction, when calculated as an annual percentage rate, does not exceed 36%.   Because a willful violation of these provisions would be crime, 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.   Existing law prohibits a check casher from charging a fee of more than $10 to set up an initial account and issue an optional identification card for providing check cashing services. Existing law makes these provisions applicable to transactions under the California Deferred Deposit Transaction Law.   This bill would make nonsubstantive changes to these provisions.  Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program:  no   yes  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Chapter 2.5 (commencing with Section 23040) is added to Division 10 of the   Financial Code   , to read:   CHAPTER 2.5. TRANSACTIONS WITH RECIPIENTS OF UNEMPLOYMENT BENEFITS 23040. As used in this chapter, the following terms have the following meanings: (a) "Annual percentage rate" has the same meaning as set forth in Section 1606 of Title 15 of the United States Code. All interest shall be included in calculating the annual percentage rate. (b) "Interest" means all charges payable directly or indirectly by a borrower to a deferred deposit originator in relation to a deferred deposit transaction, including any fee, returned check fee, check cashing fee, and any ancillary product sold in connection with the deferred deposit transaction. (c) "Unemployment benefits" means direct cash payments made under the Federal-State Unemployment Insurance Program or any other state or federal unemployment insurance program, whether provided through check, electronic benefits card, direct deposit, or any other means. 23041. (a) Notwithstanding any other provision of this division, a licensee shall not offer, originate, or make a deferred deposit transaction, arrange a deferred deposit transaction for a deferred deposit originator, act as an agent for a deferred deposit originator, or, in whole or in part, make, offer, broker, or assist a deferred deposit originator or customer in the origination of a deferred deposit transaction in California to a person who is receiving unemployment benefits unless the interest charged on the deferred deposit transaction, when calculated as an annual percentage rate, does not exceed 36 percent. (b) No person shall seek to evade the provisions of this chapter by any artifice, devise, or subterfuge, including by assisting a customer to obtain a loan at a rate of interest that would be prohibited by this chapter, making loans disguised as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates for the pretextual installment sale of goods or services.   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.   SECTION 1.   Section 1789.35 of the Civil Code is amended to read: 1789.35. (a) A check casher shall not charge a fee for cashing a payroll check or government check in excess of 3 percent if identification is provided by the customer, or 3.5 percent without the provision of identification, of the face amount of the check, or three dollars ($3), whichever is greater. Identification, for purposes of this section, is limited to a California driver's license, a California identification card, or a valid United States military identification card. (b) A check casher may charge a fee of no more than ten dollars ($10) to set up an initial account and issue an optional identification card for providing check cashing services. A replacement optional identification card may be issued at a cost that shall not exceed five dollars ($5). (c) A check casher shall provide a receipt to the customer for each transaction. (d) A check casher may charge a fee for cashing a personal check, as posted pursuant to Section 1789.30, for immediate deposit in an amount not to exceed 12 percent of the face value of the check. (e) Any person who violates any provision of this section shall be liable for a civil penalty not to exceed two thousand dollars ($2,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General in any court of competent jurisdiction. Any action brought pursuant to this subdivision shall be commenced within four years of the date on which the act or transaction upon which the action is based occurred. (f) A willful violation of this section is a misdemeanor. (g) Any person who is injured by any violation of this section may bring an action for the recovery of damages, an equity proceeding to restrain and enjoin those violations, or both. The amount awarded may be up to three times the damages actually incurred, but in no event less than the amount paid by the aggrieved consumer to a person subject to this section. If the plaintiff prevails, the plaintiff shall be awarded reasonable attorney's fees and costs. If a court determines by clear and convincing evidence that a breach or violation was willful, the court, in its discretion, may award punitive damages in addition to the amounts set forth above.   SEC. 2.   Section 23036 of the Financial Code is amended to read: 23036. (a) A fee for a deferred deposit transaction shall not exceed 15 percent of the face amount of the check. (b) A licensee may allow an extension of time, or a payment plan, for repayment of an existing deferred deposit transaction but may not charge any additional fee or charge of any kind in conjunction with the extension or payment plan. A licensee that complies with the provisions of this subdivision shall not be deemed to be in violation of subdivision (g) of Section 23037. (c) A licensee shall not enter into an agreement for a deferred deposit transaction with a customer during the period of time that an earlier written agreement for a deferred deposit transaction for the same customer is in effect. (d) A licensee who enters into a deferred deposit transaction agreement, or any assignee of that licensee, shall not be entitled to recover damages for that transaction in any action brought pursuant to, or governed by, Section 1719 of the Civil Code. (e) A fee not to exceed fifteen dollars ($15) may be charged for the return of a dishonored check by a depositary institution in a deferred deposit transaction. A single fee charged pursuant to this subdivision is the exclusive charge for a dishonored check. A fee shall not be added for late payment. (f) No amount in excess of the amounts authorized by this section shall be directly or indirectly charged by a licensee pursuant to a deferred deposit transaction. (g) A licensee shall be subject to the provisions of Title 1.6C (commencing with Section 1788) of Part 4 of Division 3 of the Civil Code.