Code Section Group

Financial Code - FIN

DIVISION 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS [12000 - 12404]

  ( Heading of Division 3 amended by Stats. 1992, Ch. 869, Sec. 1. )

CHAPTER 3. Licensing [12200 - 12225]
  ( Chapter 3 enacted by Stats. 1951, Ch. 364. )

12200.
  

No person shall engage in the business, for compensation, of selling checks, drafts, money orders, or other commercial paper serving the same purpose, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor, or acting as a prorater, nor shall any person, without direct compensation and not as an authorized agent for a utility company, accept money for the purpose of forwarding it to others in payment of utility bills, without first obtaining a license from the commissioner.

(Amended by Stats. 1983, Ch. 660, Sec. 8.)

12200.1.
  

A license to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such obligor (except a business agent or special prorater), or to accept, without direct compensation, money for the purpose of forwarding it to others in payment of utility bills, shall only be issued to a corporation organized under the laws of this State for that purpose.

(Amended by Stats. 1959, Ch. 367.)

12200.2.
  

A license as a business agent or special prorater may be issued to an individual.

(Added by Stats. 1959, Ch. 367.)

12200.3.
  

No licensee under this division shall engage in the business of selling checks, drafts, or money orders, or other commercial paper serving the same purpose or receiving money for the purpose of paying bills, invoices, or accounts of an obligor (except as business agent, or special or general prorater) or accepting money for the purpose of forwarding it to others in payment of bills at any location outside of the State of California nor shall any such licensee have agencies engaging in any such business at any location outside of the State of California.

(Added By Stats. 1963, Ch. 1817.)

12200.5.
  

The commissioner shall classify and license applicants for a proraters license in accordance with the nature of their existing or proposed business and the extent of regulation required thereby in the public interest as follows:

(a) A special proraters license shall be issued to a qualified applicant to engage in business as a business agent.

(b) A general proraters license shall be issued to all other qualified applicants.

Whenever the term “prorater” is used in this division with reference to a licensee it shall be deemed to mean a general prorater unless otherwise provided.

(Added by Stats. 1957, Ch. 498.)

12201.
  

(a) An application for a license shall be in writing, under oath, and in a form prescribed by the commissioner and shall contain the name, and the address both of the residence and place of business, of the applicant and if the applicant is a partnership or association, of every member thereof, and if a corporation, of every officer and director thereof.

(b) Notwithstanding any other law, the commissioner may by rule or order prescribe circumstances under which to accept electronic records or electronic signatures. This section does not require the commissioner to accept electronic records or electronic signatures.

(c) For purposes of this section, the following terms have the following meanings:

(1) “Electronic record” means an initial license application, or material modification of that license application, and any other record created, generated, sent, communicated, received, or stored by electronic means. “Electronic record” also includes, but is not limited to, all of the following:

(A) An application, amendment, supplement, and exhibit, filed for any license, consent, or other authority.

(B) A financial statement, report, or advertising.

(C) An order, license, consent, or other authority.

(D) A notice of public hearing, accusation, and statement of issues in connection with any application, license, consent, or other authority.

(E) A proposed decision of a hearing officer and a decision of the commissioner.

(F) The transcripts of a hearing.

(G) A release, newsletter, interpretive opinion, determination, or specific ruling.

(H) Correspondence between a party and the commissioner directly relating to any document listed in subparagraphs (A) to (G), inclusive.

(2) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.

(d) The Legislature finds and declares that the Department of Business Oversight has continuously implemented methods to accept records filed electronically, and is encouraged to continue to expand its use of electronic filings to the extent feasible, as budget, resources, and equipment are made available to accomplish that goal.

(Amended by Stats. 2015, Ch. 303, Sec. 154. Effective January 1, 2016.)

12202.
  

If the business is to be conducted at a specific address or addresses, the address or addresses at which the business is to be conducted shall be included in the application.

(Enacted by Stats. 1951, Ch. 364.)

12203.
  

If the business is to be conducted from a mobile unit, the California state registration number or other identification of such mobile unit and the area in which the applicant proposes to operate such mobile unit shall be included in the application.

(Enacted by Stats. 1951, Ch. 364.)

12204.
  

The application shall specify the type of business for which a license is requested and shall also contain such other information as the commissioner may reasonably require.

(Amended by Stats. 1953, Ch. 807.)

12205.
  

(a) A licensed bill payer, general prorater, or special prorater who does not qualify to make use of agencies in the conduct of its business at all times shall maintain a surety bond in an amount as required by subdivision (a) of Section 12206 and assets of at least ten thousand dollars ($10,000) in excess of its liabilities, of which assets at least five thousand dollars ($5,000) shall be liquid assets. A licensed bill payer, general prorater, or special prorater is qualified to make use of agencies in the conduct of its business if at all times it shall have capital of at least one hundred thousand dollars ($100,000) and maintain a surety bond in an amount as required by subdivision (a) of Section 12206 and assets, excluding goodwill and other intangible assets, of at least one hundred thousand dollars ($100,000) in excess of its liabilities, of which assets at least twenty-five thousand dollars ($25,000) shall be liquid assets.

(b) A licensed check seller, whether or not qualified to make use of agencies in the conduct of its business, shall at all times have capital of at least five hundred thousand dollars ($500,000) and maintain a surety bond in an amount as required by subdivision (b) of Section 12206 and assets, excluding goodwill and other intangible assets, of at least five hundred thousand dollars ($500,000) in excess of its liabilities, of which assets at least one hundred fifty thousand dollars ($150,000) are liquid assets. In the alternative, a licensed check seller may satisfy the assets and surety bond requirements of this subdivision by assets, excluding goodwill and other intangible assets, of at least one million dollars ($1,000,000) in excess of liabilities, of which assets at least one hundred fifty thousand dollars ($150,000) are liquid assets, and a surety bond, approved by the commissioner, in an amount of one hundred thousand dollars ($100,000).

(c) The commissioner may determine by rule or order what assets are liquid assets within the meaning of this section and may determine by specific ruling that a particular asset is or is not a liquid asset within the meaning of this section.

(d) The commissioner may by order increase the net asset and liquid asset requirements of subdivision (b) for any licensed check seller when, as a result of any examination or report under Section 12307.3, it appears to the commissioner that it is necessary for the safety and soundness of that licensed check seller.

(Amended by Stats. 1992, Ch. 869, Sec. 3. Effective January 1, 1993.)

12206.
  

(a) If the applicant is to engage in the business of receiving money for the purpose of paying bills, invoices or accounts of an obligor, the applicant shall file with the commissioner concurrently with its application for a license, a surety bond to be approved by the commissioner, in which the applicant is the principal, in the minimum amount of twenty-five thousand dollars ($25,000). A deposit given instead of the bond required by this section shall not be deemed an asset of the applicant or licensee for the purpose of complying with Section 12205.

(b) If the applicant is to engage in the business of check selling, the applicant shall file with the commissioner concurrently with its application for a license, a surety bond to be approved by the commissioner, in which the applicant is the principal, in the minimum amount of five hundred thousand dollars ($500,000). A deposit given instead of the bond required by this section shall not be deemed an asset of the applicant or licensee for the purpose of complying with Section 12205.

(Amended by Stats. 1992, Ch. 869, Sec. 4. Effective January 1, 1993.)

12207.
  

The bond shall be approved by the commissioner. The bond shall run to the state for the use of the state and of any person who has a cause of action against the principal under the provisions of this division.

(Amended by Stats. 1982, Ch. 517, Sec. 212.)

12208.
  

The bond shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this division and of all rules and regulations made by the commissioner pursuant to this division, and will honestly and faithfully apply all funds received and will faithfully and honestly perform all obligations and undertakings under this division, and will pay to the State and to any person all money that becomes due and owing to the State or to such person from the obligor under the provisions of this division. The surety under such bond may pay the full amount of its liability thereunder to a receiver appointed by a superior court pursuant to Section 12307.2 of this code in lieu of payment to the State or persons having a cause of action against the obligor of the bond, and upon such payment the surety is completely released from further liability under such bond.

(Amended by Stats. 1957, Ch. 186.)

12209.
  

The bond shall remain in force and effect until the surety is released from liability by the commissioner, or until the bond is canceled by the surety.

(Enacted by Stats. 1951, Ch. 364.)

12212.
  

No action may be brought on the bond by any person after the expiration of two years from the time when the act or default complained of occurred.

(Enacted by Stats. 1951, Ch. 364.)

12213.
  

When an action is commenced on the bond of a licensee the commissioner may require the filing of a new bond, and immediately upon the recovery of any action on the bond the licensee shall file a new bond. Failure to file a new bond within 10 days of the recovery on a bond, or within 10 days after notification that a bond is required, constitutes sufficient grounds for the suspension or revocation of a license.

(Enacted by Stats. 1951, Ch. 364.)

12214.
  

(a) An applicant at the time of filing an application for a license under this division shall pay to the commissioner the sum of fifty dollars ($50) as a fee for investigating the application and two hundred dollars ($200) as an application fee. The investigation fee and application fee are not refundable if an application is denied or withdrawn.

(b) (1) 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 programs in the year in which such assessment is made. The pro rata share shall be the proportion which a licensee’s gross income bears to the aggregate gross income of all licensees as shown by the annual financial reports to the commissioner. The pro rata share shall not include the costs of any examinations provided for in Section 12306, unless they cannot be collected from the licensee examined.

(2) On or before the 30th 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 20 days thereafter. If payment is not made within 20 days, the commissioner shall 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.

(3) In the levying and collection of the assessment, a licensee shall not be assessed for nor be permitted to pay less than one hundred fifty dollars ($150) per year.

(4) 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 such licensee. If, after such an order is made, a request for hearing is filed in writing 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; provided, however, that the revocation, suspension or surrender of a certificate shall not affect the powers of the commissioner as provided in this division.

(Amended by Stats. 1980, Ch. 497, Sec. 2.)

12216.
  

(a) Upon the filing of the application and the payment of the fees and the approval of the bond, the commissioner shall investigate and examine the following:

(1) The background and experience of the applicant and of the partners or members thereof if the applicant is a partnership or association, and of the officers and directors thereof if the applicant is a corporation, and of any organizers, incorporators, managers, or stockholders.

(2) The plan of business of the applicant. The plan of business should include, but not be limited to: (A) a feasibility and market study; (B) pro forma financial statements, including all underlying assumptions; (C) a description of the geographical area to be served by agents; (D) a description of the accounting system to be used; (E) a description of the internal control procedures for the operations of the proposed business, and for its agents; and (F) plans for future expansion of business operations.

(3) Any other factors and circumstances bearing on the applicant or any proposed facility that in the opinion of the commissioner may be relevant.

(b) If the commissioner determines that the applicant has satisfied the provisions of this division and does not find facts constituting reasons for denial as specified in Section 12221, the commissioner shall issue and deliver a license to the applicant to engage in business in accordance with the provisions of this division.

(Amended by Stats. 1992, Ch. 869, Sec. 5. Effective January 1, 1993.)

12217.
  

Each license shall state the following:

(a) The name of the licensee, and if the licensee is a partnership or association the names of the members, or if the licensee is a corporation the date and place of its incorporation.

(b) The address at which such business is to be conducted.

(c) The type of business licensed.

(Amended by Stats. 1953, Ch. 642.)

12218.
  

The license shall be kept conspicuously posted in the principal place of business of the licensee.

(Amended by Stats. 1955, Ch. 339.)

12219.
  

The license is not transferable or assignable.

(Enacted by Stats. 1951, Ch. 364.)

12220.
  

The commissioner may by regulation require licensees to file at such times as he may specify such information as the commissioner may reasonably require regarding any changes in the information provided in any application filed pursuant to this division.

(Repealed and added by Stats. 1968, Ch. 869.)

12221.
  

Upon reasonable notice and opportunity to be heard, the commissioner may deny the application for the license for any of the following reasons:

(a) A false statement of a material fact has been made in the application for license.

(b) Any officer, director, or member of the applicant has, within the last 10 years, been (1) convicted of or pleaded nolo contendere to a crime, or (2) committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with the provisions of this division.

(c) The applicant, any officer, director, general partner, or member of the applicant, or any person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant has violated any provision of this division or the rules thereunder or any similar regulatory scheme of the State of California or a foreign jurisdiction.

(d) The applicant has not complied with all the applicable provisions of this division.

(e) The proposed officers and directors do not have sufficient check selling, bill paying, prorating, or other experience to afford reasonable promise of successful operation.

(f) The plan of business does not demonstrate that the proposed business will have a reasonable chance for a successful operation.

(g) The proposed business is being formed for a purpose other than the legitimate objectives contemplated by this division.

(h) The proposed capital structure is inadequate.

(Amended by Stats. 2003, Ch. 473, Sec. 15. Effective January 1, 2004.)

12223.
  

The commissioner may require a licensee, in addition to the bond provided in Section 12206, to obtain an adequate fidelity bond for each officer, employee, agent, or any person having access to funds collected by or for the licensee or having authority to draw against such funds if in the commissioner’s opinion such a bond is necessary for the protection of the public. The bond shall be for the protection of the public against loss suffered through embezzlement by any person having access to funds collected by or for the licensee or having authority to draw against such funds, or from mysterious disappearance, theft, holdup or burglary. A deposit given instead of the bond required by this section shall not be deemed an asset of the licensee for the purpose of complying with Section 12205.

(Amended by Stats. 1982, Ch. 517, Sec. 215.)

12225.
  

The commissioner may issue a duplicate of a license that has been lost, stolen, or destroyed, or for a certificate which the licensee desires to replace, upon satisfactory proof of such loss, theft, or destruction, or upon surrender of a certificate for replacement and the payment of a fee of two dollars ($2).

(Added by Stats. 1955, Ch. 339.)

FINFinancial Code - FIN