Amended IN Senate March 17, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 362Introduced by Senator GraysonFebruary 13, 2025 An act to amend Section 90009.5 of amend, renumber, and add Section 22806 of, to add Sections 22807 and 22808 to, and to repeal Section 22805 of, the Financial Code, relating to consumer protection. commercial financing.LEGISLATIVE COUNSEL'S DIGESTSB 362, as amended, Grayson. California Consumer Financial Protection Law: report. Commercial financing: disclosures.Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law provides that a provider of commercial financing licensed under the California Financing Law (CFL) is subject to examination and enforcement by the Commissioner of Financial Protection and Innovation under the CFL for any violation of those disclosure provisions, as specified. Certain violations of the CFL are a crime.This bill would prohibit a provider of commercial financing from using a specified underwriting method unless the provider participates in a specified review process. The bill would also prohibit those providers from using the term interest or rate, except as specified, and would require those providers to use the term annual percentage rate or the acronym APR in specified circumstances. The bill would repeal the provision subjecting those providers to the CFL described above, and would instead provide that a violation of the disclosure provisions described above and the provisions of the bill is a violation of the CFL if the violation relates to a commercial financing transaction subject to the CFL, or a violation of the California Consumer Financial Protection Law if the violation relates to a commercial financing transaction that is not subject to the CFL. By expanding the scope of 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.The California Consumer Financial Protection Law (CCFPL) requires the Department of Financial Protection and Innovation to regulate the offering and provision of consumer financial products or services under California consumer financial laws, as defined, and exercise nonexclusive oversight and enforcement authority under California consumer financial laws. The CCFPL requires the Commissioner of Financial Protection and Innovation to, at least once annually, before March 15, appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement the CCFPL during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year, as prescribed.This bill would change the March 15 date described above to June 1.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOYES Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 22805 of the Financial Code is repealed.22805.Any provider licensed under the California Financing Law (Division 9 (commencing with Section 22000)) as of the date that the final regulations adopted by the commissioner pursuant to Section 22804 become effective and from that point thereafter, shall be subject to examination and enforcement by the commissioner under California Financing Law (Division 9 (commencing with Section 22000)) for any violation of this division or any rule or order adopted pursuant to this division.SEC. 2. Section 22806 of the Financial Code is amended and renumbered to read:22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.SEC. 3. Section 22806 is added to the Financial Code, to read:22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.SEC. 4. Section 22807 is added to the Financial Code, to read:22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.SEC. 5. Section 22808 is added to the Financial Code, to read:22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.SECTION 1.Section 90009.5 of the Financial Code is amended to read:90009.5.(a)Notwithstanding paragraph (1) of subdivision (a) of Section 90009, the department shall promulgate rules regarding registration requirements applicable to a covered person no later than three years following the initiation of its second action to enforce a violation of this division by persons providing the same or substantially similar consumer financial product or service as the covered person.(b)The regulation requiring a covered person to register with the department shall become inoperative on January 1, of the calendar year that is four years following the initial year of required registration unless the Legislature takes action to extend the registration or to incorporate the scope of the activity in which the covered person is authorized to engage into a new or existing licensing law. The Legislature shall conduct public hearings to obtain input on the desirability or feasibility of extending, revising, or terminating the regulation. Failure of the Legislature to take action pursuant to this section shall not impact the departments enforcement authority under this division.(c)The department shall submit to the appropriate committees of the Legislature on or before December 1 before the year a regulation described in subdivision (b) is set to become inoperative, a complete report of the departments activities related to the covered persons required to be registered by the regulation covering the entire period since the initial year of required registration.(d)At least once annually, before June 1, the commissioner shall appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement this division during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year. This report shall include, but not be limited to, all of the following:(1)A summary of all enforcement actions taken to implement this division during the prior year.(2)A review of business models in use among covered persons that it studied during the prior year and a description of which business models in use among covered persons it plans to study during the upcoming year.(3)A review of all regulations it proposed, or finalized, or on which it sought public feedback during the prior year and a description of all regulations it intends to propose, finalize, or on which it intends to seek public feedback during the upcoming year.(4)A review of all of the activities in which it engaged during the prior year using authority contained in paragraph (1) of subdivision (d) of Section 90006 and a description of the activities in which it plans to engage during the upcoming year.(5)A review of all outreach efforts it conducted during the prior year using authority contained in paragraph (2) of subdivision (d) of Section 90006 and a description of subject matter it plans to include and groups to which it plans to outreach during the upcoming year.(6)A review of all activities it conducted during the prior year using authority contained in paragraph (3) of subdivision (d) of Section 90006 and a description of what activities it plans to conduct during the upcoming year.(7)Any other topic deemed relevant by the commissioner or requested to be covered by a chair of the appropriate committee of the Legislature.
Amended IN Senate March 17, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 362Introduced by Senator GraysonFebruary 13, 2025 An act to amend Section 90009.5 of amend, renumber, and add Section 22806 of, to add Sections 22807 and 22808 to, and to repeal Section 22805 of, the Financial Code, relating to consumer protection. commercial financing.LEGISLATIVE COUNSEL'S DIGESTSB 362, as amended, Grayson. California Consumer Financial Protection Law: report. Commercial financing: disclosures.Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law provides that a provider of commercial financing licensed under the California Financing Law (CFL) is subject to examination and enforcement by the Commissioner of Financial Protection and Innovation under the CFL for any violation of those disclosure provisions, as specified. Certain violations of the CFL are a crime.This bill would prohibit a provider of commercial financing from using a specified underwriting method unless the provider participates in a specified review process. The bill would also prohibit those providers from using the term interest or rate, except as specified, and would require those providers to use the term annual percentage rate or the acronym APR in specified circumstances. The bill would repeal the provision subjecting those providers to the CFL described above, and would instead provide that a violation of the disclosure provisions described above and the provisions of the bill is a violation of the CFL if the violation relates to a commercial financing transaction subject to the CFL, or a violation of the California Consumer Financial Protection Law if the violation relates to a commercial financing transaction that is not subject to the CFL. By expanding the scope of 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.The California Consumer Financial Protection Law (CCFPL) requires the Department of Financial Protection and Innovation to regulate the offering and provision of consumer financial products or services under California consumer financial laws, as defined, and exercise nonexclusive oversight and enforcement authority under California consumer financial laws. The CCFPL requires the Commissioner of Financial Protection and Innovation to, at least once annually, before March 15, appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement the CCFPL during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year, as prescribed.This bill would change the March 15 date described above to June 1.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOYES
Amended IN Senate March 17, 2025
Amended IN Senate March 17, 2025
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Senate Bill
No. 362
Introduced by Senator GraysonFebruary 13, 2025
Introduced by Senator Grayson
February 13, 2025
An act to amend Section 90009.5 of amend, renumber, and add Section 22806 of, to add Sections 22807 and 22808 to, and to repeal Section 22805 of, the Financial Code, relating to consumer protection. commercial financing.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 362, as amended, Grayson. California Consumer Financial Protection Law: report. Commercial financing: disclosures.
Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law provides that a provider of commercial financing licensed under the California Financing Law (CFL) is subject to examination and enforcement by the Commissioner of Financial Protection and Innovation under the CFL for any violation of those disclosure provisions, as specified. Certain violations of the CFL are a crime.This bill would prohibit a provider of commercial financing from using a specified underwriting method unless the provider participates in a specified review process. The bill would also prohibit those providers from using the term interest or rate, except as specified, and would require those providers to use the term annual percentage rate or the acronym APR in specified circumstances. The bill would repeal the provision subjecting those providers to the CFL described above, and would instead provide that a violation of the disclosure provisions described above and the provisions of the bill is a violation of the CFL if the violation relates to a commercial financing transaction subject to the CFL, or a violation of the California Consumer Financial Protection Law if the violation relates to a commercial financing transaction that is not subject to the CFL. By expanding the scope of 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.The California Consumer Financial Protection Law (CCFPL) requires the Department of Financial Protection and Innovation to regulate the offering and provision of consumer financial products or services under California consumer financial laws, as defined, and exercise nonexclusive oversight and enforcement authority under California consumer financial laws. The CCFPL requires the Commissioner of Financial Protection and Innovation to, at least once annually, before March 15, appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement the CCFPL during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year, as prescribed.This bill would change the March 15 date described above to June 1.
Existing law requires a provider of commercial financing to disclose certain information, as specified. Existing law provides that a provider of commercial financing licensed under the California Financing Law (CFL) is subject to examination and enforcement by the Commissioner of Financial Protection and Innovation under the CFL for any violation of those disclosure provisions, as specified. Certain violations of the CFL are a crime.
This bill would prohibit a provider of commercial financing from using a specified underwriting method unless the provider participates in a specified review process. The bill would also prohibit those providers from using the term interest or rate, except as specified, and would require those providers to use the term annual percentage rate or the acronym APR in specified circumstances. The bill would repeal the provision subjecting those providers to the CFL described above, and would instead provide that a violation of the disclosure provisions described above and the provisions of the bill is a violation of the CFL if the violation relates to a commercial financing transaction subject to the CFL, or a violation of the California Consumer Financial Protection Law if the violation relates to a commercial financing transaction that is not subject to the CFL. By expanding the scope of 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.
The California Consumer Financial Protection Law (CCFPL) requires the Department of Financial Protection and Innovation to regulate the offering and provision of consumer financial products or services under California consumer financial laws, as defined, and exercise nonexclusive oversight and enforcement authority under California consumer financial laws. The CCFPL requires the Commissioner of Financial Protection and Innovation to, at least once annually, before March 15, appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement the CCFPL during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year, as prescribed.
This bill would change the March 15 date described above to June 1.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 22805 of the Financial Code is repealed.22805.Any provider licensed under the California Financing Law (Division 9 (commencing with Section 22000)) as of the date that the final regulations adopted by the commissioner pursuant to Section 22804 become effective and from that point thereafter, shall be subject to examination and enforcement by the commissioner under California Financing Law (Division 9 (commencing with Section 22000)) for any violation of this division or any rule or order adopted pursuant to this division.SEC. 2. Section 22806 of the Financial Code is amended and renumbered to read:22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.SEC. 3. Section 22806 is added to the Financial Code, to read:22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.SEC. 4. Section 22807 is added to the Financial Code, to read:22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.SEC. 5. Section 22808 is added to the Financial Code, to read:22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.SECTION 1.Section 90009.5 of the Financial Code is amended to read:90009.5.(a)Notwithstanding paragraph (1) of subdivision (a) of Section 90009, the department shall promulgate rules regarding registration requirements applicable to a covered person no later than three years following the initiation of its second action to enforce a violation of this division by persons providing the same or substantially similar consumer financial product or service as the covered person.(b)The regulation requiring a covered person to register with the department shall become inoperative on January 1, of the calendar year that is four years following the initial year of required registration unless the Legislature takes action to extend the registration or to incorporate the scope of the activity in which the covered person is authorized to engage into a new or existing licensing law. The Legislature shall conduct public hearings to obtain input on the desirability or feasibility of extending, revising, or terminating the regulation. Failure of the Legislature to take action pursuant to this section shall not impact the departments enforcement authority under this division.(c)The department shall submit to the appropriate committees of the Legislature on or before December 1 before the year a regulation described in subdivision (b) is set to become inoperative, a complete report of the departments activities related to the covered persons required to be registered by the regulation covering the entire period since the initial year of required registration.(d)At least once annually, before June 1, the commissioner shall appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement this division during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year. This report shall include, but not be limited to, all of the following:(1)A summary of all enforcement actions taken to implement this division during the prior year.(2)A review of business models in use among covered persons that it studied during the prior year and a description of which business models in use among covered persons it plans to study during the upcoming year.(3)A review of all regulations it proposed, or finalized, or on which it sought public feedback during the prior year and a description of all regulations it intends to propose, finalize, or on which it intends to seek public feedback during the upcoming year.(4)A review of all of the activities in which it engaged during the prior year using authority contained in paragraph (1) of subdivision (d) of Section 90006 and a description of the activities in which it plans to engage during the upcoming year.(5)A review of all outreach efforts it conducted during the prior year using authority contained in paragraph (2) of subdivision (d) of Section 90006 and a description of subject matter it plans to include and groups to which it plans to outreach during the upcoming year.(6)A review of all activities it conducted during the prior year using authority contained in paragraph (3) of subdivision (d) of Section 90006 and a description of what activities it plans to conduct during the upcoming year.(7)Any other topic deemed relevant by the commissioner or requested to be covered by a chair of the appropriate committee of the Legislature.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 22805 of the Financial Code is repealed.22805.Any provider licensed under the California Financing Law (Division 9 (commencing with Section 22000)) as of the date that the final regulations adopted by the commissioner pursuant to Section 22804 become effective and from that point thereafter, shall be subject to examination and enforcement by the commissioner under California Financing Law (Division 9 (commencing with Section 22000)) for any violation of this division or any rule or order adopted pursuant to this division.
SECTION 1. Section 22805 of the Financial Code is repealed.
### SECTION 1.
22805.Any provider licensed under the California Financing Law (Division 9 (commencing with Section 22000)) as of the date that the final regulations adopted by the commissioner pursuant to Section 22804 become effective and from that point thereafter, shall be subject to examination and enforcement by the commissioner under California Financing Law (Division 9 (commencing with Section 22000)) for any violation of this division or any rule or order adopted pursuant to this division.
Any provider licensed under the California Financing Law (Division 9 (commencing with Section 22000)) as of the date that the final regulations adopted by the commissioner pursuant to Section 22804 become effective and from that point thereafter, shall be subject to examination and enforcement by the commissioner under California Financing Law (Division 9 (commencing with Section 22000)) for any violation of this division or any rule or order adopted pursuant to this division.
SEC. 2. Section 22806 of the Financial Code is amended and renumbered to read:22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.
SEC. 2. Section 22806 of the Financial Code is amended and renumbered to read:
### SEC. 2.
22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.
22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.
22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.
22806.22805. No provision of this division imposes any liability on a provider as a result of the actual Annual Percentage Rate (APR) charged by a provider differing from the Estimated APR disclosed in conformity with any regulation, order, or written interpretive opinion of the commissioner or any such opinion of the Attorney General, whether or not such regulation, order, or written interpretive opinion is later amended, rescinded, or repealed or determined by judicial or other authority to be invalid for any reason.
SEC. 3. Section 22806 is added to the Financial Code, to read:22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.
SEC. 3. Section 22806 is added to the Financial Code, to read:
### SEC. 3.
22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.
22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.
22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.
22806. (a) A provider shall not use the underwriting method described in Section 931 of Title 10 of the California Code of Regulations unless the provider participates in a review process pursuant to subdivision (b).
(b) (1) A provider that uses the underwriting method described in Section 931 of Title 10 of the California Code of Regulations shall, on an annual basis, report data to the commissioner regarding estimated annual percentage rates disclosed to recipients and actual retrospective annual percentage rates of completed transactions.
(2) The report required by paragraph (1) shall contain information as the commissioner, by rule, prescribes as necessary or appropriate for the purpose of making a determination of whether the deviation between estimated annual percentage rates and actual retrospective annual percentage rates of completed transactions was reasonable.
(c) (1) The commissioner shall establish the method of reporting required by subdivision (b) and may, upon finding that the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate, require the provider to use the historical method pursuant to Section 930 of Title 10 of the California Code of Regulations.
(2) The commissioner may consider unusual and extraordinary circumstances impacting the providers deviation between the estimated and actual annual percentage rate in determining whether the use of projected sales volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rate.
SEC. 4. Section 22807 is added to the Financial Code, to read:22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.
SEC. 4. Section 22807 is added to the Financial Code, to read:
### SEC. 4.
22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.
22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.
22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.
22807. (a) A provider shall not use the term interest to describe a percentage rate unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.
(b) A provider shall not use the term rate to describe a metric of financing cost presented or disclosed during an application process for a commercial financing transaction unless that rate is an annual percentage rate calculated pursuant to Section 940 of Title 10 of the California Code of Regulations.
(c) After extending a specific offer to a potential recipient, whenever a provider states a charge, pricing metric, or financing amount to the potential recipient during an application process for commercial financing, the provider shall also state the annual percentage rate of that commercial financing offer by using the term annual percentage rate or the acronym APR.
SEC. 5. Section 22808 is added to the Financial Code, to read:22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).
SEC. 5. Section 22808 is added to the Financial Code, to read:
### SEC. 5.
22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).
22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).
22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).
22808. (a) A violation of this division by a person licensed under the California Financing Law (Division 9 (commencing with Section 22000)) shall be deemed a violation of the California Financing Law if the violation relates to a commercial financing transaction that is subject to the California Financing Law.
(b) A violation of this provision shall be deemed an unfair, deceptive, or abusive act or practice under the California Consumer Financial Protection Law (Division 24 (commencing with Section 90000)) if the violation relates to a commercial financing transaction that is not subject to the California Financing Law (Division 9 (commencing with Section 22000)).
SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.
SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.
SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution.
### SEC. 6.
(a)Notwithstanding paragraph (1) of subdivision (a) of Section 90009, the department shall promulgate rules regarding registration requirements applicable to a covered person no later than three years following the initiation of its second action to enforce a violation of this division by persons providing the same or substantially similar consumer financial product or service as the covered person.
(b)The regulation requiring a covered person to register with the department shall become inoperative on January 1, of the calendar year that is four years following the initial year of required registration unless the Legislature takes action to extend the registration or to incorporate the scope of the activity in which the covered person is authorized to engage into a new or existing licensing law. The Legislature shall conduct public hearings to obtain input on the desirability or feasibility of extending, revising, or terminating the regulation. Failure of the Legislature to take action pursuant to this section shall not impact the departments enforcement authority under this division.
(c)The department shall submit to the appropriate committees of the Legislature on or before December 1 before the year a regulation described in subdivision (b) is set to become inoperative, a complete report of the departments activities related to the covered persons required to be registered by the regulation covering the entire period since the initial year of required registration.
(d)At least once annually, before June 1, the commissioner shall appear before, and present a report to, the appropriate committees of the Legislature reviewing all of the activities conducted to implement this division during the prior year and summarizing, with specificity, all of the activities it intends to conduct during the upcoming year. This report shall include, but not be limited to, all of the following:
(1)A summary of all enforcement actions taken to implement this division during the prior year.
(2)A review of business models in use among covered persons that it studied during the prior year and a description of which business models in use among covered persons it plans to study during the upcoming year.
(3)A review of all regulations it proposed, or finalized, or on which it sought public feedback during the prior year and a description of all regulations it intends to propose, finalize, or on which it intends to seek public feedback during the upcoming year.
(4)A review of all of the activities in which it engaged during the prior year using authority contained in paragraph (1) of subdivision (d) of Section 90006 and a description of the activities in which it plans to engage during the upcoming year.
(5)A review of all outreach efforts it conducted during the prior year using authority contained in paragraph (2) of subdivision (d) of Section 90006 and a description of subject matter it plans to include and groups to which it plans to outreach during the upcoming year.
(6)A review of all activities it conducted during the prior year using authority contained in paragraph (3) of subdivision (d) of Section 90006 and a description of what activities it plans to conduct during the upcoming year.
(7)Any other topic deemed relevant by the commissioner or requested to be covered by a chair of the appropriate committee of the Legislature.