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AB-3010 California Deferred Deposit Transaction Law. (2017-2018)

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Date Published: 04/20/2018 04:00 AM
AB3010:v97#DOCUMENT

Amended  IN  Assembly  April 19, 2018
Amended  IN  Assembly  March 19, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 3010


Introduced by Assembly Member Limón

February 16, 2018


An act to amend Sections 23001, 23016, and 23036 of, and to add Section 23036.5 to, the Financial Code, relating to deferred deposit transactions.


LEGISLATIVE COUNSEL'S DIGEST


AB 3010, as amended, Limón. California Deferred Deposit Transaction Law.
The California Deferred Deposit Transaction Law provides for the licensure and regulation by the Commissioner of Business Oversight of persons engaged in the business of making or arranging deferred deposit transactions. Existing law, among other things, prohibits a licensee from entering into an agreement for a deferred deposit transaction with a customer during the period of time that an earlier written agreement for a deferred deposit transaction for the same customer is in effect. A knowing and willful violation of the provisions of this law is a crime.
This bill would require the commissioner, by July 1, 2019, to develop operate, and maintain an Internet Web site and common database in which a licensee would be required to, by the time period described below, record each deferred deposit transaction for the purpose of preventing violations of the California Deferred Deposit Transaction Law. The bill would require the database to meet certain requirements, including that it allow real-time access to information entered into the database via an Internet connection. The bill would, alternatively, authorize the commissioner to contract with a provider to develop, operate, or maintain the database. The bill would require, on or after July 1, 2019, a licensee to conduct a search on the database before entering into any deferred deposit transaction, and would prohibit the licensee from entering into that transaction if the database reveals the customer has any outstanding deferred deposit transactions. The bill would require, on or after July 1, 2019, a licensee to enter specified information related to deferred deposit transactions into the database, and would require the licensee to adhere to generally accepted security safeguards to maintain the confidentiality and security of information transmitted to the database. By expanding the scope of an existing crime, this bill would impose a state-mandated local program. The bill would provide that the information contained in the database is confidential and not subject to public inspection, and the database and its contents are not subject to requests under the California Public Records Act, except as specified.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 23001 of the Financial Code is amended to read:

23001.
 As used in this division, the following terms have the following meanings:
(a) “Deferred deposit transaction” means a transaction whereby a person defers depositing a customer’s personal check until a specific date, pursuant to a written agreement for a fee or other charge, as provided in Section 23035.
(b) “Commissioner” means the Commissioner of Business Oversight.
(c) “Database” means a common database established pursuant to Section 23036.5.
(d) “Department” means the Department of Business Oversight.
(e) “Licensee” means any person who offers, originates, or makes a deferred deposit transaction, who arranges a deferred deposit transaction for a deferred deposit originator, who acts as an agent for a deferred deposit originator, or who assists a deferred deposit originator in the origination of a deferred deposit transaction. However, “licensee” does not include a state or federally chartered bank, thrift, savings association, industrial loan company, or credit union. “Licensee” also does not include a retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers that cashes checks or issues money orders for a minimum fee not exceeding two dollars ($2) as a service to its customers that is incidental to its main purpose or business. “Licensee” also does not include an employee regularly employed by a licensee at the licensee’s place of business. An employee, when acting under the scope of the employee’s employment, shall be exempt from any other law from which the employee’s employer is exempt.
(f) “Person” means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government entity, or a political subdivision of a government entity.
(g) “Deferred deposit originator” means a person who offers, originates, or makes a deferred deposit transaction.

SEC. 2.

 Section 23016 of the Financial Code is amended to read:

23016.
 (a) Each licensee shall pay to the commissioner its pro rata share of all costs and expenses reasonably incurred in the administration of this division, as estimated by the commissioner, for the ensuing year and any deficit actually incurred or anticipated in the administration of the program in the year in which the assessment is made. The assessment will be based on the number of locations. The assessment shall include an amount that is sufficient to cover the reasonable regulatory costs of the commissioner to develop and administer the database.
(b) On or before the 20th day of May in each year, the commissioner shall notify each licensee by mail of the amount assessed and levied against it and that amount shall be paid within 30 days thereafter. If payment is not made within 30 days, the commissioner may assess and collect a penalty, in addition to the assessment, of 1 percent of the assessment for each month or part of a month that the payment is delayed or withheld.
(c) If a licensee fails to pay the assessment on or before the 30th day of June following the day upon which payment is due, the commissioner may by order summarily suspend or revoke the certificate issued to the licensee. If, after an order is made, a request for hearing is filed in writing within 30 days, and a hearing is not held within 60 days thereafter, the order is deemed rescinded as of its effective date. During any period when its certificate is revoked or suspended, a licensee shall not conduct business pursuant to this division except as may be permitted by order of the commissioner. However, the revocation, suspension, or surrender of a certificate shall not affect the powers of the commissioner as provided in this division.

SEC. 3.

 Section 23036 of the Financial Code is amended to read:

23036.
 (a) A fee for a deferred deposit transaction shall not exceed 15 percent of the face amount of the check.
(b) A licensee may allow an extension of time, or a payment plan, for repayment of an existing deferred deposit transaction but may not charge any additional fee or charge of any kind in conjunction with the extension or payment plan. A licensee that complies with the provisions of this subdivision shall not be deemed to be in violation of subdivision (g) of Section 23037.
(c) A licensee shall not enter into an agreement for a deferred deposit transaction with a customer during the period of time that an earlier written agreement for a deferred deposit transaction for the same customer is in effect with any licensee, as reflected by the database established pursuant to Section 23036.5.
(d) A licensee who enters into a deferred deposit transaction agreement, or any assignee of that licensee, shall not be entitled to recover damages for that transaction in any action brought pursuant to, or governed by, Section 1719 of the Civil Code.
(e) A fee not to exceed fifteen dollars ($15) may be charged for the return of a dishonored check by a depositary institution in a deferred deposit transaction. A single fee charged pursuant to this subdivision is the exclusive charge for a dishonored check. No fee may be added for late payment.
(f) No amount in excess of the amounts authorized by this section shall be directly or indirectly charged by a licensee pursuant to a deferred deposit transaction.
(g) A licensee shall be subject to the provisions of Title 1.6C (commencing with Section 1788) of Part 4 of Division 3 of the Civil Code.

SEC. 4.

 Section 23036.5 is added to the Financial Code, to read:

23036.5.
 (a) For purposes of this section:
(1) “Database provider” means a third-party vendor that has entered into an agreement with the commissioner to administer a database.
(2) “Outstanding deferred deposit transaction” means a deferred deposit transaction listed in the database that has not been paid in full.
(b) (1) The commissioner shall, by July 1, 2019, develop, operate, and maintain an Internet Web site and common database in which a licensee shall, by the time period described below, record each deferred deposit transaction for the purpose of preventing violations of this division. The database shall do all of the following:
(A) Allow licensees real-time access to information on deferred deposit transactions entered into the database through an Internet connection.
(B) Retain data in the database only as necessary to ensure compliance with this division.
(2) The commissioner may, consistent with existing contracting requirements, contract with a database provider to develop, operate, or maintain the database described in paragraph (1) on behalf of the department. If the commissioner does so, the commissioner shall include the following provisions in the contract:
(A) A provision requiring data be archived 365 calendar days after it was first entered, and allow the commissioner access to that archived data as necessary.
(B) A provision requiring the database provider to ensure that the data is confidential, except as otherwise authorized by this section.
(C) A provision requiring the database provider to comply with all requirements of this section relating to the database.
(c) On or after July 1, 2019, a licensee, before entering into any deferred deposit transaction, shall conduct a search on the database to ensure that the customer does not have any outstanding deferred deposit transactions. If that customer does have an outstanding deferred deposit transaction, the licensee shall not enter into a deferred deposit transaction with that customer.
(d) If the search conducted by the licensee under subdivision (c) reveals that the customer does not have any outstanding deferred deposit transaction, and that transaction otherwise meets all other requirements of this division, the licensee may enter into an agreement for that transaction with the customer. After entering into that agreement, the licensee shall submit all information regarding the customer and the transaction that the commissioner determines is necessary to record that transaction. That information shall include, at a minimum, the following:

(1)Identifying information regarding the applicant, including the applicant’s date of birth and one of the following:

(A)

(1) The applicant’s social security number. If the applicant cannot provide a social security number, the licensee shall submit an individual taxpayer identification number.

(B)The applicant’s alien registration number.

(C)The applicant’s individual tax identification number.

(2)Identifying information regarding the terms of the deferred deposit transaction, including the amount of the check, the amount of money received by the customer, the date of the transaction, the date the customer’s check will be withdrawn from the customer’s account, and fees associated with the deferred deposit transaction.

(e)On or after, July 1, 2019, a licensee shall immediately record in the database any event related to a deferred deposit transaction that was recorded in the database, including, but not limited to, the following:

(1)Imposition of a returned check fee.

(2)A payment default.

(3)A due date extension.

(4)Entering into a repayment plan.

(5)The charge off of a debt.

(6)Entering into a settlement.

(7)The referral or sale of a deferred deposit transaction to a third party for collection.

(8)Any action brought in court, including, but not limited to, small claims court, and the terms of any judgment obtained, including costs and attorneys’ fees.

(f)If a deferred deposit transaction that was recorded in the database is paid in full, then the licensee shall immediately record in the database that the funds were received from the customer, the method by which the transaction was repaid, and every unsuccessful attempt by the licensee to recover funds from a customer’s account, if applicable.

(2) When a deferred deposit transaction was initiated.
(3) When a deferred deposit transaction that was recorded in the database is paid in full.

(g)

(e) A licensee shall immediately correct any incorrect data that was previously entered into the database, including any information that the licensee becomes aware needs to be updated.

(h)

(f) If a licensee is unable to access the database due to technical difficulties, the licensee shall not be in violation of any obligation to immediately record data pursuant to this section so long as the licensee records that data on the next business day following the day that the database becomes accessible, or complies with any alternate process to record that data established by the commissioner.

(i)

(g) A licensee shall maintain generally accepted security safeguards to maintain the confidentiality and security of information transmitted to the database, as determined by the commissioner.

(j)

(h) (1) The information contained in the database is confidential and not subject to public inspection, and the database and its contents are not subject to requests under the California Public Records Act, Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code. A licensee may not disclose the information except as otherwise provided by law, including paragraph (2).
(2) Notwithstanding paragraph (1), the commissioner may publicly release aggregate data maintained in the database if the commissioner finds that the release is in the public interest. However, that release shall, in no instance, include personal personally identifying information of any customer. customer or licensee, including a licensee that is a business or corporation.

SEC. 5.

 The Legislature finds and declares that Section 4 of this act, which adds Section 23036.5 to the Financial Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following finding to demonstrate the interest protected by this limitation and the need for protecting the interest:
Records of deferred deposit transaction customers include personal financial information, which must be protected to avoid identity theft and other misuse. Therefore, the health and safety of the people of California are enhanced by limiting access of deferred deposit transaction data to ensure that customer information remains confidential.

SEC. 6.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.