Legal Status: Legal
Citation:
Cal. Fin. Code §§ 23000 to 23106
Loan Terms:
Maximum Loan Amount: $300
Loan Term: Max: 31 days
Maximum Finance Rate and Fees: 15% of check
Finance Charge for 14-day $100 loan: $17.65
APR for 14-day $100 loan: 459%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: One
Rollovers Permitted: None (cannot charge fee for extension)
Cooling-off Period: None
Repayment Plan: Voluntary (no fees may be charged in conjunction with payment plan)
Collection Limits:
Collection Fees: $15 NSF fee
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: California Department of Corporations
Address: Financial Services Division, 1515 K Street, Suite 200 Sacramento CA 95814
Phone: (866) 275-2677
Applicability: This statute applies to those persons or entities included in the definition of “licensee:” 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. Otherwise consumer loan act applies. Cal Fin. Code § 22303 (2.5% per month on amount up to $225; 2% per month on $226 to $900; 1.5% per month on $901-$1650; 1% on $1,651-$2,500).
Exemptions: Persons or entities that are not “licensees.”
Licensing Requirements: At the time of filing the application, the applicant shall pay to the commissioner $100 as a fee for investigating the application, and $200 as an application fee, and the cost of fingerprint processing. Applicants must have a net worth of at least $25,000, regardless of the number of licensed locations. A licensee shall maintain a surety bond of $25,000. A license shall be conspicuously posted in the place of business authorized by the licensee.
Required disclosures: Every licensee shall conspicuously post a complete, detailed, and unambiguous schedule of fees that is clear, legible and in letters not less than one-half inch in height. Before entering into a deferred deposit transaction, licensees shall distribute to customers a notice of the customer’s rights under the deferred deposit transaction law. The following notices shall be clearly and conspicuously posted in the unobstructed view of the public by all licensees in each location of a business providing deferred deposit transactions in letters not less than one-half inch in height: The licensee cannot use the criminal process against a consumer to collect any deferred deposit transaction. The schedule of all charges and fees to be charged on those deferred deposit transactions with an example of all charges and fees that would be charged on at least a $100 and a $200 deferred deposit transaction, payable in 14 days and 30 days, respectively, giving the corresponding annual percentage rate. An agreement to enter into a deferred deposit transaction shall be in writing, signed by the customer, and shall include disclosures required by the Federal Truth In Lending Act and its regulations (written and available in the same language principally used in any oral discussions or negotiations leading to execution of the deferred deposit agreement and in at least 10-point type); the name, address, and telephone number of the licensee; the customer’s name and address; the date to which deposit of check has been deferred (due date); the payment plan, or extension, if applicable; an itemization of the amount financed as required under the Federal Truth In Lending Act and its regulations; disclosure of any returned check charges; that the customer cannot be prosecuted or threatened with prosecution to collect; that the licensee cannot accept collateral in connection with the transaction; that the licensee cannot make a deferred deposit transaction contingent on the purchase of another product or service; signature space for the customer and signature of the licensee or authorized representative of the licensee and date of the transaction.
Prohibited acts: No licensee shall: advertise, print, display, publish, distribute, or broadcast, in any manner, any statement or representation with regard to the business subject to the provisions of this division that is false, misleading, or deceptive, or that omits material information that is necessary to make the statements not false, misleading, or deceptive; place an advertisement disseminated primarily in this state for a deferred deposit transaction unless the licensee discloses in the printed text of the advertisement, or the oral text in the case of a radio or television advertisement, that the licensee is licensed by the department pursuant to this division; accept or use the same check for a subsequent transaction, or permit a customer to pay off all or a portion of one deferred deposit transaction with the proceeds of another; accept any collateral for a deferred deposit transaction; make any deferred deposit transaction contingent on the purchase of insurance or any other goods or services; enter into a deferred deposit transaction with a person lacking the capacity to contract; alter the date or any other information on a check; engage in any unfair, unlawful, or deceptive conduct, or make any statement that is likely to mislead in connection with the business of deferred deposit transactions; accept more than one check for a single deferred deposit transaction; take any check, instrument, or form in which blanks are left to be filled in after execution; offer, arrange, act as an agent for, or assist a deferred deposit originator in any way in the making of a deferred deposit transaction unless the deferred deposit originator complies with all applicable federal and state laws and regulations, including the provisions of this division. A customer who enters into a deferred deposit transaction and offers a personal check to a licensee pursuant to an agreement shall not be subject to any criminal penalty for the failure to comply with the terms of that agreement. 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.
Loan Terms: A licensee may defer the deposit of a customer’s personal check for up to 31 days, pursuant to the provisions of this section. The face amount of the check shall not exceed $300. Each deferred deposit transaction shall be made pursuant to a written agreement signed by the customer and by the licensee or an authorized representative of the licensee. 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.
Permitted charges: A fee for a deferred deposit transaction shall not exceed 15 percent of the face amount of the check. A licensee who enters into a deferred deposit transaction agreement shall not be entitled to recover damages for that transaction. A fee not to exceed $15 may be charged for the return of a dishonored check by a depositary institution in a deferred deposit transaction. A single fee is the exclusive charge for a dishonored check. No fee may be added for late payment.
Enforcement and Penalties: The commission may revoke or suspend a license, order a person or licensee to desist and to refrain from engaging in the business or further violating this division; and bring an action in the name of the people of the State of California against that person to enjoin that person from continuing that violation or doing any act in furtherance of the violation. If any amount other than, or in excess of, the charges or fees permitted by this division is willfully charged, contracted for, or received, a deferred deposit transaction contract shall be void, and no person shall have any right to collect or receive the principal amount provided in the deferred deposit transaction, any charges, or fees in connection with the transaction. Civil penalty not to exceed $2,500 for each violation. Any person who willfully violates these rules, shall, upon conviction, be punished by a fine of not more than ten thousand dollars $10,000, or by imprisonment in a county jail for not more than one year, or by both that fine and imprisonment. However, no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order.
