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SB-497 Qualifying accounts: overdraft features: direct deposit.(2021-2022)

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Date Published: 02/17/2021 09:00 PM
SB497:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 497


Introduced by Senator Limón

February 17, 2021


An act to amend Section 17325 of the Family Code, Section 1339.1 of the Unemployment Insurance Code, and Section 11006.2 of the Welfare and Institutions Code, relating to direct deposit of funds.


LEGISLATIVE COUNSEL'S DIGEST


SB 497, as introduced, Limón. Qualifying accounts: overdraft features: direct deposit.
Existing law provides for protection, care, and assistance for people of the state, and the promotion of the welfare and happiness of all people in the state by providing appropriate aid and services to the needy and distressed. Programs established for this purpose include, among others, the California Work Opportunity and Responsibility to Kids (CalWORKs) program, which requires each county to provide cash assistance and other social services to needy families using federal Temporary Assistance to Needy Families block grant program, state, and county funds. Existing law authorizes any person entitled to the receipt of public assistance payments to authorize payment to be directly deposited by electronic fund transfer into the person’s qualifying account at a financial institution of the person’s choice, as specified.
Other existing law obligates a parent to support their child. Existing law establishes the Department of Child Support Services within the California Health and Human Services Agency, which administers all services and performs all functions necessary to establish, collect, and distribute child support. Existing law establishes within the Department of Child Support Services the State Disbursement Unit to provide timely and accurate payment processing and centralized payment disbursement from a single location in the state. Existing law requires child support payments that are directly deposited to an account of the recipient’s choice to be deposited to a qualifying account, as specified.
Other existing law provides for unemployment compensation benefits to eligible persons who are unemployed through no fault of their own. These provisions are generally administered by the Employment Development Department. Existing law requires unemployment compensation benefits that are directly deposited to an account of the recipient’s choice to be deposited to a qualifying account, as specified.
Existing law defines “qualifying account” for these purposes to mean a demand deposit or savings account at an insured financial institution in the name of the person entitled to receipt of public assistance payments or child support payments, as applicable, or a prepaid card account that meets certain requirements, including that the prepaid card account may not be attached to any credit or overdraft feature that is automatically repaid from the account after delivery of the payment.
This bill would make changes to the definition of qualifying account, including authorizing a prepaid account, or a demand deposit or savings account offered at an insured depository financial institution, as specified, or by or through an entity other than an insured depository financial institution, as specified, to be attached to a credit or overdraft feature if the credit or overdraft feature has no fee, charge, or cost, or if the credit or overdraft feature complies with the requirements for consumer credit under the federal Truth in Lending Act. To the extent this bill would increase the responsibilities of counties in providing benefits under the CalWORKs program, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 17325 of the Family Code is amended to read:

17325.
 (a) (1) Notwithstanding any other law, if child support payments are directly deposited to an account of the recipient’s choice, as authorized under the federal Electronic Fund Transfer Act (EFTA) (15 U.S.C. Sec. 1693 et seq.), the payments may only be deposited to an account that meets the requirements of a qualifying account, as defined in paragraph (2), for deposit of child support payments.
(2) For purposes of this section, a “qualifying account” is one of the following:
(A) A demand deposit or savings account at an insured depository financial institution that is offered directly by the insured depository financial institution on its internet website or through its branches and that is in the name of the person entitled to the receipt of child support payments.
(B) A prepaid card account account, or a demand deposit or savings account offered by, or through, an entity other than an insured depository financial institution, that meets all of the following:
(i) The account is held at an insured depository financial institution.
(ii) The account is set up to meet the requirements for direct or passthrough deposit or share insurance so that the funds accessible through the account are eligible for insurance for the benefit of payable to the person entitled to the receipt of child support payments by the Federal Deposit Insurance Corporation in accordance with Part 330 of Title 12 of the Code of Federal Regulations, or the National Credit Union Share Insurance Fund in accordance with Part 745 of Title 12 of the Code of Federal Regulations.
(iii) The account is not attached to any a credit or overdraft feature that is automatically repaid from the account after delivery of the payment. unless the credit or overdraft feature has no fee, charge, or cost, whether direct, required, voluntary, or involuntary, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account under the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and its implementing regulations.
(iv) The issuer of the card complies with all of the requirements, and provides the holder of the card with all of the consumer protections, that apply to a payroll card account under the rules implementing the EFTA or other rules subsequently adopted under the EFTA that apply to prepaid card accounts.
(3) A person or entity that issues a prepaid card or maintains or manages a prepaid card account that does not comply with paragraph (2) shall not accept or facilitate the direct deposit of child support payments to the prepaid card account.
(b) For purposes of this section, the department shall not be held liable for authorizing a direct deposit of child support payments into a prepaid card account designated by the recipient that does not comply with paragraph (2) of subdivision (a). The department has no obligation to determine whether an account at the financial institution of the recipient’s choice is a qualifying account as described in subdivision (a).
(c) For the purposes of this section, the following definitions shall apply:
(1) “Financial institution” means a state or national bank, a state or federal savings and loan association, a mutual savings bank, or a state or federal credit union.
(2) “Issuer” means a person or entity that issues a prepaid card.
(3) “Payroll card account” shall have the same meaning as that term is defined in the regulations implementing the EFTA.
(4) “Prepaid card” or “prepaid card account” means either of the following:
(A) A card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.
(B) The same as those terms or related terms are defined in the regulations adopted under the EFTA regarding general use reloadable cards.

SEC. 2.

 Section 1339.1 of the Unemployment Insurance Code is amended to read:

1339.1.
 (a) (1) Notwithstanding any other provisions of this part, if unemployment compensation benefit payments are directly deposited to an account of the recipient’s choice, as authorized under the federal Electronic Fund Transfer Act (EFTA) (15 U.S.C. Sec. 1693 et seq.), the payments may only be deposited to an account that meets the requirements of a qualifying account, as defined in paragraph (2), for deposit of public assistance payments, including unemployment compensation benefits.
(2) For purposes of this section, a “qualifying account” is one of the following:
(A) A demand deposit or savings account at an insured depository financial institution that is offered directly by the insured depository financial institution on its internet website or through its branches and that is in the name of the person entitled to receipt of public assistance payments.
(B) A prepaid card account account, or a demand deposit or savings account offered by, or through, an entity other than an insured depository financial institution, that meets all of the following:
(i) The account is held at an insured depository financial institution.
(ii) The account is set up to meet the requirements for passthrough deposit or share insurance so that the funds accessible through the account are eligible for insurance for the benefit of the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation in accordance with Part 330 of Title 12 of the Code of Federal Regulations, or the National Credit Union Share Insurance Fund in accordance with Part 745 of Title 12 of the Code of Federal Regulations.
(iii) The account is not attached to any a credit or overdraft feature that is automatically repaid from the account after delivery of the payment. unless the credit or overdraft feature has no fee, charge, or cost, whether direct, required, voluntary, or involuntary, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account under the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and its implementing regulations.
(iv) The issuer of the card complies with all of the requirements, and provides the holder of the card with all of the consumer protections, that apply to a payroll card account under the rules implementing the EFTA or other rules subsequently adopted under the EFTA that apply to prepaid card accounts.
(3) A person or entity that issues a prepaid card or maintains or manages a prepaid card account that does not comply with paragraph (2) shall not accept or facilitate the direct deposit of unemployment compensation benefit payments to the prepaid card account.
(b) The department has no obligation to determine whether an account at the financial institution of the recipient’s choice is a qualifying account, as described in subdivision (a). For purposes of this section, the department shall not be held liable for authorizing a direct deposit of unemployment compensation benefit payments into a prepaid card account designated by the recipient that does not comply with paragraph (2) of subdivision (a).
(c) For the purposes of this section, the following definitions shall apply:
(1) “Financial institution” means a state or national bank, a state or federal savings and loan association, a mutual savings bank, or a state or federal credit union.
(2) “Issuer” means a person or entity that issues a prepaid card.
(3) “Payroll card account” shall have the same meaning as that term is defined in the regulations implementing the EFTA.
(4) “Prepaid card” or “prepaid card account” means either of the following:
(A) A card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.
(B) The same as those terms or related terms are defined in the regulations adopted under the EFTA regarding general use reloadable cards.

SEC. 3.

 Section 11006.2 of the Welfare and Institutions Code is amended to read:

11006.2.
 (a) The department may provide for the delivery of public assistance payments at any time during the month.
(b) (1) Notwithstanding any other law, any person entitled to the receipt of public assistance payments may authorize payment to be directly deposited by electronic fund transfer into the person’s qualifying account at the financial institution of his or her the person’s choice under a program for direct deposit by electronic transfer as established in this section. The direct deposit to a qualifying account shall discharge the department’s obligation with respect to the payment.
(2) Each county treasurer shall make an agreement with one or more financial institutions participating in the Automated Clearing House pursuant to the local rules, and shall, by December 1, 2001, establish a program for the direct deposit by electronic fund transfer of payments to any person entitled to the receipt of public assistance benefits who authorizes the direct deposit of the benefits into the person’s qualifying account at the financial institution of his or her the person’s choice. Each county treasurer has no obligation to determine whether the account at the financial institution of the person’s choice is a qualifying account, as defined in paragraph (3).
(3) For purposes of this section, a “qualifying account” is one of the following:
(A) A demand deposit or savings account at an insured depository financial institution that is offered directly by the insured depository financial institution on its internet website and through its branches and that is in the name of the person entitled to receipt of public assistance payments.
(B) A prepaid card account account, or a demand deposit or savings account offered by or through an entity other than an insured depository financial institution, that meets all of the following:
(i) The account is held at an insured depository financial institution.
(ii) The account is set up to meet the requirements for direct or passthrough deposit or share insurance so that the funds accessible through the account are eligible for insurance for the benefit of payable to the person entitled to the receipt of public assistance payments by the Federal Deposit Insurance Corporation in accordance with Part 330 of Title 12 of the Code of Federal Regulations, or the National Credit Union Share Insurance Fund in accordance with Part 745 of Title 12 of the Code of Federal Regulations.
(iii) The account is not attached to any a credit or overdraft feature that is automatically repaid from the account after delivery of the payment. unless the credit or overdraft feature has no fee, charge, or cost, whether direct, required, voluntary, or involuntary, or the credit or overdraft feature complies with the requirements for credit offered in connection with a prepaid account under the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and its implementing regulations.
(iv) The issuer of the card complies with all of the requirements, and provides the holder of the card with all of the consumer protections, that apply to a payroll card account under the rules implementing the federal Electronic Fund Transfer Act (EFTA) (15 U.S.C. Sec. 1693 et seq.) or other rules subsequently adopted under the EFTA that apply to prepaid card accounts.
(4) A person or entity that issues a prepaid card or maintains or manages a prepaid card account that does not comply with paragraph (3) shall not accept or facilitate the direct deposit of public assistance payments to the prepaid card account.
(5) For purposes of this section, each county treasurer and county welfare department shall not be held liable for authorizing a direct deposit of public assistance payments into a prepaid card account, designated by the person entitled to receipt of public assistance benefits, that does not comply with paragraph (3).
(6) This subdivision shall apply in each county that offers a program for direct deposit by electronic funds transfer to some or all of its employees.
(c) For the purposes of this section, the following definitions shall apply:
(1) “Financial institution” means a state or national bank, a state or federal savings and loan association, a mutual savings bank, or a state or federal credit union.
(2) “Issuer” means a person or entity that issues a prepaid card.
(3) “Payroll card account” shall have the same meaning as that term is defined in the regulations implementing the EFTA.
(4) “Prepaid card” or “prepaid card account” means either of the following:
(A) A card, code, or other means of access to funds of a recipient that is usable at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.
(B) The same as those terms or related terms are defined in the regulations adopted under the EFTA regarding general use reloadable cards.

SEC. 4.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.