Amended IN Senate March 24, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 505Introduced by Senator RichardsonFebruary 19, 2025An act to add Division 16 (commencing with Section 34000) to Chapter 10 (commencing with Section 2180) to Division 1.2 of the Financial Code, relating to financial protection.LEGISLATIVE COUNSEL'S DIGESTSB 505, as amended, Richardson. Digital wallets: security. Money Transmission Act: stored value platforms: fraudulently induced transfers.The Money Transmission Act (MTA) prohibits a person from engaging in the business of money transmission in the state, or from advertising, soliciting, or holding itself out as providing money transmission in the state, unless the person is licensed by the Department of Financial Protection and Innovation under the act. The MTA defines money transmission to mean, among other things, selling or issuing stored value to a person located in the state and defines stored value to mean monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The MTA punishes noncompliance with, among other things, a civil penalty, license revocation, and, for certain violations, as a felony, as prescribed.This bill would require, under the act, an operator of a stored value platform to reimburse a customer for any loss directly caused by a fraudulently induced transfer, as prescribed, and would require an operator of a stored value platform to establish means by which a customer can submit a claim for reimbursement that allow for the customer to communicate a claim through, among other methods, digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform. 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.Existing law, the California Consumer Financial Protection Law, requires the Department of Financial Protection and Innovation to, among other things, regulate the offering and provision of consumer financial products or services under California consumer financial laws and exercise nonexclusive oversight and enforcement authority under California consumer financial laws.This bill would require a business that offers a digital wallet to users in the state to take certain actions relating to ensuring the security of the digital wallet, including requiring users to enable two-factor authentication for use before any transaction can be completed. The bill would define digital wallet to mean a digital payment application that allows a user to make a consumer transaction.This bill would impose a civil penalty of $5,000 per day of noncompliance, to be collected in an action brought by the department or the Attorney General, as specified.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. Chapter 10 (commencing with Section 2180) is added to Division 1.2 of the Financial Code, to read: CHAPTER 10. Fraudulently Induced Transfers2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.SEC. 2. 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.Division 16 (commencing with Section 34000) is added to the Financial Code, to read:16.Digital Wallet Security34000.As used in this section:(a)Covered business means a business that offers a digital wallet to users in the state.(b)Department means the Department of Financial Protection and Innovation.(c)Digital wallet means a digital payment application that allows a user to make a consumer transaction.(d)Two-factor authentication means a security protocol that requires the user to provide two separate pieces of information to verify the authenticity of an action, including, but not limited to, a password, an application-generated code, or a code delivered to the user through an email or text message.34001.(a)A covered business shall do all of the following:(1)Require users to enable two-factor authentication for use before any transaction can be completed.(2)Provide users with an easy-to-use mechanism to report fraudulent activity related to the digital wallet.(3)Immediately notify a user if the covered business detects suspicious or unauthorized activity related to the users digital wallet.(b)A covered business shall audit the security features required by this section at least annually.34002.Noncompliance with this division shall be punishable by a civil penalty of five thousand dollars ($5,000) per day to be collected in an action brought only by the department or the Attorney General.
Amended IN Senate March 24, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 505Introduced by Senator RichardsonFebruary 19, 2025An act to add Division 16 (commencing with Section 34000) to Chapter 10 (commencing with Section 2180) to Division 1.2 of the Financial Code, relating to financial protection.LEGISLATIVE COUNSEL'S DIGESTSB 505, as amended, Richardson. Digital wallets: security. Money Transmission Act: stored value platforms: fraudulently induced transfers.The Money Transmission Act (MTA) prohibits a person from engaging in the business of money transmission in the state, or from advertising, soliciting, or holding itself out as providing money transmission in the state, unless the person is licensed by the Department of Financial Protection and Innovation under the act. The MTA defines money transmission to mean, among other things, selling or issuing stored value to a person located in the state and defines stored value to mean monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The MTA punishes noncompliance with, among other things, a civil penalty, license revocation, and, for certain violations, as a felony, as prescribed.This bill would require, under the act, an operator of a stored value platform to reimburse a customer for any loss directly caused by a fraudulently induced transfer, as prescribed, and would require an operator of a stored value platform to establish means by which a customer can submit a claim for reimbursement that allow for the customer to communicate a claim through, among other methods, digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform. 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.Existing law, the California Consumer Financial Protection Law, requires the Department of Financial Protection and Innovation to, among other things, regulate the offering and provision of consumer financial products or services under California consumer financial laws and exercise nonexclusive oversight and enforcement authority under California consumer financial laws.This bill would require a business that offers a digital wallet to users in the state to take certain actions relating to ensuring the security of the digital wallet, including requiring users to enable two-factor authentication for use before any transaction can be completed. The bill would define digital wallet to mean a digital payment application that allows a user to make a consumer transaction.This bill would impose a civil penalty of $5,000 per day of noncompliance, to be collected in an action brought by the department or the Attorney General, as specified.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOYES
Amended IN Senate March 24, 2025
Amended IN Senate March 24, 2025
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Senate Bill
No. 505
Introduced by Senator RichardsonFebruary 19, 2025
Introduced by Senator Richardson
February 19, 2025
An act to add Division 16 (commencing with Section 34000) to Chapter 10 (commencing with Section 2180) to Division 1.2 of the Financial Code, relating to financial protection.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 505, as amended, Richardson. Digital wallets: security. Money Transmission Act: stored value platforms: fraudulently induced transfers.
The Money Transmission Act (MTA) prohibits a person from engaging in the business of money transmission in the state, or from advertising, soliciting, or holding itself out as providing money transmission in the state, unless the person is licensed by the Department of Financial Protection and Innovation under the act. The MTA defines money transmission to mean, among other things, selling or issuing stored value to a person located in the state and defines stored value to mean monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The MTA punishes noncompliance with, among other things, a civil penalty, license revocation, and, for certain violations, as a felony, as prescribed.This bill would require, under the act, an operator of a stored value platform to reimburse a customer for any loss directly caused by a fraudulently induced transfer, as prescribed, and would require an operator of a stored value platform to establish means by which a customer can submit a claim for reimbursement that allow for the customer to communicate a claim through, among other methods, digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform. 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.Existing law, the California Consumer Financial Protection Law, requires the Department of Financial Protection and Innovation to, among other things, regulate the offering and provision of consumer financial products or services under California consumer financial laws and exercise nonexclusive oversight and enforcement authority under California consumer financial laws.This bill would require a business that offers a digital wallet to users in the state to take certain actions relating to ensuring the security of the digital wallet, including requiring users to enable two-factor authentication for use before any transaction can be completed. The bill would define digital wallet to mean a digital payment application that allows a user to make a consumer transaction.This bill would impose a civil penalty of $5,000 per day of noncompliance, to be collected in an action brought by the department or the Attorney General, as specified.
The Money Transmission Act (MTA) prohibits a person from engaging in the business of money transmission in the state, or from advertising, soliciting, or holding itself out as providing money transmission in the state, unless the person is licensed by the Department of Financial Protection and Innovation under the act. The MTA defines money transmission to mean, among other things, selling or issuing stored value to a person located in the state and defines stored value to mean monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The MTA punishes noncompliance with, among other things, a civil penalty, license revocation, and, for certain violations, as a felony, as prescribed.
This bill would require, under the act, an operator of a stored value platform to reimburse a customer for any loss directly caused by a fraudulently induced transfer, as prescribed, and would require an operator of a stored value platform to establish means by which a customer can submit a claim for reimbursement that allow for the customer to communicate a claim through, among other methods, digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform. 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.
Existing law, the California Consumer Financial Protection Law, requires the Department of Financial Protection and Innovation to, among other things, regulate the offering and provision of consumer financial products or services under California consumer financial laws and exercise nonexclusive oversight and enforcement authority under California consumer financial laws.
This bill would require a business that offers a digital wallet to users in the state to take certain actions relating to ensuring the security of the digital wallet, including requiring users to enable two-factor authentication for use before any transaction can be completed. The bill would define digital wallet to mean a digital payment application that allows a user to make a consumer transaction.
This bill would impose a civil penalty of $5,000 per day of noncompliance, to be collected in an action brought by the department or the Attorney General, as specified.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Chapter 10 (commencing with Section 2180) is added to Division 1.2 of the Financial Code, to read: CHAPTER 10. Fraudulently Induced Transfers2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.SEC. 2. 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.Division 16 (commencing with Section 34000) is added to the Financial Code, to read:16.Digital Wallet Security34000.As used in this section:(a)Covered business means a business that offers a digital wallet to users in the state.(b)Department means the Department of Financial Protection and Innovation.(c)Digital wallet means a digital payment application that allows a user to make a consumer transaction.(d)Two-factor authentication means a security protocol that requires the user to provide two separate pieces of information to verify the authenticity of an action, including, but not limited to, a password, an application-generated code, or a code delivered to the user through an email or text message.34001.(a)A covered business shall do all of the following:(1)Require users to enable two-factor authentication for use before any transaction can be completed.(2)Provide users with an easy-to-use mechanism to report fraudulent activity related to the digital wallet.(3)Immediately notify a user if the covered business detects suspicious or unauthorized activity related to the users digital wallet.(b)A covered business shall audit the security features required by this section at least annually.34002.Noncompliance with this division shall be punishable by a civil penalty of five thousand dollars ($5,000) per day to be collected in an action brought only by the department or the Attorney General.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Chapter 10 (commencing with Section 2180) is added to Division 1.2 of the Financial Code, to read: CHAPTER 10. Fraudulently Induced Transfers2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.
SECTION 1. Chapter 10 (commencing with Section 2180) is added to Division 1.2 of the Financial Code, to read:
### SECTION 1.
CHAPTER 10. Fraudulently Induced Transfers2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.
CHAPTER 10. Fraudulently Induced Transfers2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.
CHAPTER 10. Fraudulently Induced Transfers
CHAPTER 10. Fraudulently Induced Transfers
2180. For purposes of this chapter:(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.
2180. For purposes of this chapter:
(a) Fraudulently induced transfer means a transfer on a stored value platform that was initiated in response to a fraudulent or dishonest course of conduct intended to manipulate, deceive, or persuade a customer into sending stored value to an account outside of the customers control.
(b) Stored value platform means a method or service provided by an issuer of stored value that allows a customer of the issuer to send or transfer stored value to another customer of the issuer of stored value.
2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.
2181. An operator of a stored value platform shall reimburse a customer for any loss directly caused by a fraudulently induced transfer.
2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:(1) Physical mail.(2) Telephone via the number displayed pursuant to Section 2107.(3) Email.(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.
2182. (a) An operator of a stored value platform shall establish means by which a customer can submit a claim for reimbursement pursuant to Section 2181 that allow for the customer to communicate a claim through all of the following methods:
(1) Physical mail.
(2) Telephone via the number displayed pursuant to Section 2107.
(3) Email.
(4) Digital communication via the internet website through which a customer is able to initiate a transfer of stored value on the stored value platform.
(5) Digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform.
(b) (1) An operator of a stored value platform shall clearly and conspicuously disclose on its internet website and mobile application directions explaining the methods of communicating the customers claim required by subdivision (a).
(2) The disclosure required by paragraph (1) shall be accessible to a customer without requiring account access credentials.
2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.(2) Except as provided in Section 2184, complete its investigation with 10 business days.(3) Report the results of its investigation within three business days after completing its investigation.(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.
2183. (a) Upon receiving a claim for reimbursement pursuant to Section 2182, an operator of a stored value platform shall do all of the following:
(1) Promptly conduct a reasonable investigation of the oral or written allegation of a fraudulently induced transaction.
(2) Except as provided in Section 2184, complete its investigation with 10 business days.
(3) Report the results of its investigation within three business days after completing its investigation.
(4) Reimburse the loss within one business day after determining that a fraudulently induced transaction has occurred.
(b) An operator of a stored value platform shall not require that a customer first provide a police report before initiating an investigation of the claim for reimbursement.
2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:(1) Provisionally credits the funds to the customers account within 10 business days.(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.(3) Gives the customer full use of the provisionally credited funds during the investigation.(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.
2184. (a) If an operator of a stored value platform needs additional information to complete the investigation required under Section 2183, the operator may take up to 45 days to complete its investigation if the operator does the following:
(1) Provisionally credits the funds to the customers account within 10 business days.
(2) Notifies the customer within two days after provisionally crediting the funds of the amount and date of the provisional credit and any additional information the operator requests from the customer.
(3) Gives the customer full use of the provisionally credited funds during the investigation.
(b) An operator of a stored value platform who takes up to 45 days to complete its investigation pursuant to this section shall comply with Section 2183.
2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.
2185. (a) On or before July 1, 2026, an operator of a stored value platform shall notify its customers of their rights pursuant to this chapter in a notice that is clear, conspicuous, and readily understandable.
(b) An operator of a stored value platform shall amend the terms and conditions of its contracts or user agreements to provide that the operator will reimburse a customer pursuant to this chapter.
2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.
2186. In addition to the authorities provided to the commissioner and any remedies available to the commissioner pursuant to this division, the commissioner may order a person who violates this chapter to refund moneys or pay restitution, damages, or other monetary relief to a customer harmed by the violation.
SEC. 2. 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. 2. 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. 2. 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. 2.
As used in this section:
(a)Covered business means a business that offers a digital wallet to users in the state.
(b)Department means the Department of Financial Protection and Innovation.
(c)Digital wallet means a digital payment application that allows a user to make a consumer transaction.
(d)Two-factor authentication means a security protocol that requires the user to provide two separate pieces of information to verify the authenticity of an action, including, but not limited to, a password, an application-generated code, or a code delivered to the user through an email or text message.
(a)A covered business shall do all of the following:
(1)Require users to enable two-factor authentication for use before any transaction can be completed.
(2)Provide users with an easy-to-use mechanism to report fraudulent activity related to the digital wallet.
(3)Immediately notify a user if the covered business detects suspicious or unauthorized activity related to the users digital wallet.
(b)A covered business shall audit the security features required by this section at least annually.
Noncompliance with this division shall be punishable by a civil penalty of five thousand dollars ($5,000) per day to be collected in an action brought only by the department or the Attorney General.