citation: FIN § 8201

text:
(a) Whenever the commissioner determines that any institution-affiliated party or any director, officer, or employee of a savings and loan holding company or affiliate thereof has committed any of the following violations, engaged or participated in any of the following unsafe or unsound practices, or committed any of the following breaches of fiduciary duty that meet the additional criteria of subdivision (b), the commissioner may serve upon that person a written notice of the commissioner’s intent to order the removal of the person from his or her office or employment or to prohibit any further participation (in any manner) in the conduct of the affairs of any savings association, or both:

(1) Violation of any statute or regulation, any cease and desist order which has become final, any condition imposed in writing by the commissioner in connection with the grant of any application or other request by the savings association or any written agreement between the savings institution and the commissioner.

(2) Engaging or participating in any unsafe or unsound practice in connection with any savings association.

(3) Committing or engaging in any act, omission, or practice which constitutes a breach of the person’s fiduciary duty.

(b) A violation, practice, or breach specified in subdivision (a) is subject to the commissioner’s authority under this section if the commissioner finds both of the following:

(1) By reason of the violation, practice, or breach (A) the savings association has suffered or will probably suffer financial loss or other damage (B) the interests of the savings association’s depositors have been or could be prejudiced, or (C) the institution-affiliated party or other person specified in subdivision (a) has received financial gain or other benefit by reason of the violation, practice, or breach.

(2) The violation, practice, or breach (A) involves personal dishonesty on the part of the institution-affiliated party or other person specified in subdivision (a) or (B) demonstrates willful or continuing disregard by the institution-affiliated party or other person for the safety or soundness of the savings institution.

(c) The written notice shall contain a full statement of the alleged violations, practices, or breaches of fiduciary duty, shall state the facts alleged in support of the violation, practice or breach, and shall state the commissioner’s intention to enter a removal or prohibition order, or both. The notice shall be delivered to the board of directors of the association, savings and loan holding company, or subsidiary, and to the institution-affiliated party or other director, officer, or employee concerned. If a hearing on the matter is requested within 10 days after service of the written notice, the commissioner shall hold a public hearing at which any pertinent evidence relating to the matters set forth in the written notice may be presented. After the hearing, the commissioner, on the basis of the evidence presented at the hearing, may proceed to enter (1) an order for the immediate removal of the institution-affiliated party or director, officer, or employee affected, (2) an order prohibiting further participation by the person, in any manner, in the conduct of the affairs of any savings association, (3) a reprimand of the individuals and entities or other persons concerned, or (4) a dismissal of the entire matter.

(d) If no hearing is requested within the time specified, the commissioner may proceed to issue orders of removal, prohibition, or both on the basis of the facts set forth in the written notice.

(e) No institution-affiliated party or director, officer, or employee who has been removed from his or her position pursuant to a removal order that has become final, shall thereafter participate in any manner in the conduct of the affairs of the savings association from or with respect to which that director, officer, or employee was removed, or without prior written approval of the commissioner, serve as a director, officer, or employee of any other savings association. No institution-affiliated party, including an officer, director, or employee, who is subject to an order of prohibition which has become final shall thereafter participate, in any manner, in the conduct of the affairs of any savings association.

(f) In respect to any officer, director, or employee of a savings association, savings and loan holding company or subsidiary thereof who is the subject of a written notice served by the commissioner pursuant to subdivision (a), the commissioner may, if the commissioner deems it necessary for the protection of the savings association or the interests of the association’s depositors, by written notice to that effect served upon the officer, director, employee, suspend him or her from office or prohibit him or her from further participation in any manner in the conduct of the affairs of the savings association or related entity, or take both these actions. The suspension or prohibition shall become effective upon service of the notice and, unless stayed by the court in proceedings authorized by subdivision (g), shall remain in effect pending completion of the proceedings pursuant to the written notice served under subdivision (a) and until the effective date of an order entered by the commissioner under subdivision (c) or (d). Copies of the notice shall also be served upon the savings association, savings and loan holding company, or subsidiary of which the person is a director, officer, or employee.

(g) Within 10 days after any director, officer, or employee has been suspended from office or prohibited from participation in the conduct of the affairs of a savings association, savings and loan holding company, or subsidiary thereof under subdivision (f), the director, officer, or employee may apply to a court having jurisdiction for a stay of the suspension or prohibition pending completion of the proceedings pursuant to subdivision (c), and the court shall have power to stay the suspension or prohibition.

history: (History: Repealed and added by Stats. 1990, Ch. 1118, Sec. 53.)

article: 5. Enforcement


kind: section

code: FIN

citation: FIN § 8202

text:
(a) The commissioner shall publish and make the following available to the public:

(1) Any final order issued with respect to any administrative enforcement proceeding initiated by the commissioner pursuant to this division or any other provision of law.

(2) Any modification to, or termination of, any final order specified in paragraph (1).

(b) If the commissioner makes a determination in writing that the publication of any final order pursuant to subdivision (a) would seriously threaten the safety or soundness of a savings association, the commissioner may delay the publication of the order for a reasonable time.

history: (History: Added by Stats. 1990, Ch. 1118, Sec. 54.)

division: 2. SAVINGS ASSOCIATION LAW

chapter: 7. Supervision

article: 5. Enforcement

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 5. Enforcement


citation: FIN § 8225

text:
(a) Whenever the commissioner deems it necessary in order to conserve the assets of any association for the benefit of the depositors and other creditors, or if the commissioner finds any of the following with respect to any association: (1) the association is in an impaired condition; (2) the association is engaging in practices that threaten to result in an impaired condition; (3) the association has substantially dissipated its assets due to violation of law or regulation or to unsafe or unsound practice; (4) the association is in an unsafe or unsound condition to transact business; (5) the association is in violation of an order or injunction, as authorized by this division; or (6) the association refuses to submit its books, papers, and affairs to the inspection of the commissioner, the commissioner may, ex parte and without notice, appoint a conservator for the association.

(b) The conservator may be the commissioner, deputy commissioner or any other person.

(c) The conservator shall, upon appointment, immediately take possession of the books, records, and assets of every description of the association and shall take any further action as he or she may deem necessary to conserve the assets of the association pending further disposition of its business.

(d) Within six months of the date of appointment of the conservator, or within 12 months if the commissioner extends the six months’ period, the association shall be returned to its board of directors to be managed and operated as if no conservator had been appointed, or a receiver shall be appointed as provided in Section 8250.

(e) If the commissioner or a department employee is appointed conservator no additional compensation shall be paid, but if another person is appointed then the compensation of the conservator, as determined by the commissioner, shall be paid by the association.

(f) Any expenses of such conservatorship shall be paid out of the assets of the association and shall be a lien against association assets prior to any other lien.

history: (History: Amended by Stats. 1989, Ch. 11, Sec. 1. Effective April 14, 1989.)

article: 6. Conservatorship

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 6. Conservatorship


citation: FIN § 8226

text: Any conservator shall have all the rights, powers, and privileges possessed by the officers, directors, members and stockholders of the association.

history: (History: Added by Stats. 1983, Ch. 1091, Sec. 2.)

article: 6. Conservatorship


citation: FIN § 8227

text: Except as authorized by the commissioner, the conservator shall not retain special counsel or other experts, incur any expense other than normal operating expenses, or liquidate assets except in the ordinary course of operations.

history: (History: Amended by Stats. 1984, Ch. 868, Sec. 17.5.)

article: 6. Conservatorship


citation: FIN § 8228

text: The directors and officers shall remain in office and the employees shall remain in their respective positions, but the conservator may remove any director, officer, or employee, provided the order of removal of a director or officer shall be approved in writing by the commissioner.

article: 6. Conservatorship


citation: FIN § 8229

text:
(a) While the association is in the charge of a conservator, savings account holders, borrowers, and other obligors of the association shall continue to make payments to the association in accordance with the terms and conditions of their contracts, and the conservator may permit savings account holders to withdraw their accounts from the association pursuant to the provisions of this division but shall not declare, credit, or distribute interest for savings accounts without prior approval of the commissioner.

(b) The conservator shall have power to accept savings accounts and additions to savings accounts, but any amounts received by the conservator may be segregated if the commissioner shall so order in writing. If so ordered, these amounts shall not be subject to offset and shall not be used to liquidate any indebtedness of the association existing at the time the conservator was appointed for it or any subsequent indebtedness incurred for the purposes of liquidating the indebtedness of the association existing at the time the conservator was appointed.

(c) All expenses of the association during conservatorship shall be paid by the association.

history: (History: Amended by Stats. 1984, Ch. 868, Sec. 17.7.)

article: 6. Conservatorship


citation: FIN § 8230

text: Whenever a conservator has taken possession of the property and business of any association pursuant to this article, that association, within 10 days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the home office of the association is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after hearing and determination of the facts, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to that association.

history: (History: Added by Stats. 1988, Ch. 718, Sec. 21.5.)

article: 6. Conservatorship


citation: FIN § 8250

text:
(a) If the commissioner finds that any association (1) is in an impaired condition, (2) is engaging in practices that threaten to result in an impaired condition, or (3) is in violation of an order or injunction issued pursuant to this division, the commissioner may appoint a receiver for the association.

(b) The receiver may be the commissioner, deputy commissioner or any other person.

(c) The receiver shall, upon appointment, immediately take possession of the books, records, and assets of every description of the association.

history: (History: Amended by Stats. 1988, Ch. 718, Sec. 22.)

article: 7. Receivership

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 7. Receivership


citation: FIN § 8251

text:
(a) In the case of an insured association, the appointment by the commissioner of a receiver under this article shall constitute an official determination of a public authority of this state pursuant to which a receiver is appointed for the purpose of liquidation as contemplated by and within the meaning of subdivision (d) of Section 401 of the National Housing Act of 1934 (12 U.S.C. Sec. 1701 et seq.), as amended.

(b) A receiver shall have all the powers and authority of a conservator plus the power to liquidate, and shall have any other powers and authority that are expressed in an order of a court.

history: (History: Amended by Stats. 1988, Ch. 718, Sec. 23.)

article: 7. Receivership


citation: FIN § 8252

text: If the commissioner or a department employee is appointed receiver, no additional compensation shall be paid, but if another person is appointed, then the compensation of the receiver, as determined by the court, shall be paid from the assets of the association.

history: (History: Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.)

article: 7. Receivership


citation: FIN § 8253

text: If the association is an institution insured by the Federal Deposit Insurance Corporation, the Federal Deposit Insurance Corporation shall be tendered appointment as receiver or coreceiver. If it accepts the appointment, it may, nevertheless, make loans on the security of or purchase at public or private sale any part or all of the assets of the association of which it is receiver or coreceiver, provided the loan or purchase is approved by the court.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 55.)

article: 7. Receivership


citation: FIN § 8254

text: Whenever a receiver has taken possession of the property and business of any association pursuant to this article, that association, within 10 days after the taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the home office of the association is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after hearing and determination of the facts, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to that association.

history: (History: Added by Stats. 1988, Ch. 718, Sec. 24.)

article: 7. Receivership


citation: FIN § 8500

text:
(a) Every federal association and the holders of stock, shares, share accounts, savings accounts, and certificate accounts issued by any federal association have all the rights, powers, and privileges, and are entitled to the same exemptions and immunities granted, respectively, to associations organized under the laws of this state and to the holders of their stock, membership accounts, and savings accounts.

(b) This section is in addition and supplemental to any provision that, by specific reference, is applicable to federal associations and their members or stockholders.

history: (History: Repealed and added by Stats. 1987, Ch. 1162, Sec. 16. Effective September 26, 1987.)

chapter: 8. Federal Associations

path: 2. SAVINGS ASSOCIATION LAW > 8. Federal Associations


citation: FIN § 8501

text: No director of a federal association shall be liable for monetary damages to the federal association, its stockholders or members, based upon the laws of this state, to the extent that the stockholders, or in case of a mutual federal association the members of the federal association, adopt a resolution limiting liability. The resolution shall not eliminate or limit the liability of directors for any acts or omissions or transactions from which directors of a corporation may not be relieved of liability as set forth in the exception to paragraph (10) of Section 204 of the Corporations Code.

history: (History: Added by Stats. 1987, Ch. 730, Sec. 21.)


citation: FIN § 9000

text: Associations shall pay all fees required by this division to the department.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 566. Effective January 1, 1997. Operative July 1, 1997.)

chapter: 9. Fees

path: 2. SAVINGS ASSOCIATION LAW > 9. Fees


citation: FIN § 9001

text:
(a) Except where otherwise expressly provided, the commissioner shall prescribe by regulation the amount of each fee expressly required by the provisions of this division, including both existing provisions and provisions that are added by future enactments.

(b) The commissioner may require, and prescribe by regulation the amount of a fee not to exceed one hundred dollars ($100), for filing any application that requires the commissioner’s approval where a fee is not expressly required by the provisions of this division.


text:
Terms not expressly defined in this chapter have the meaning given in Chapter 1 (commencing with Section 5000) or as the commissioner may provide by regulation. For the purposes of this chapter:

(a) “California savings association” means either (1) an association or (2) a foreign association or successor thereof that was licensed to do the business of an association in California on September 15, 1935.

(b) “Foreign holding company” means a savings and loan holding company as defined in Section 10 of the Home Owners Loan Act, as amended (12 U.S.C. Sec. 1467a) or bank holding company as defined in Section 3 of the federal Bank Holding Company Act, as amended, (12 U.S.C. Sec. 1841 et seq.), which savings and loan or bank holding company (1) has its principal place of deposits outside of California and (2) does not control a subsidiary California savings association or a subsidiary federal association with, or a subsidiary foreign savings association with, an authorized home or branch office in California at which accounts may lawfully be opened and deposits may lawfully be accepted.

(c) “Foreign savings association” means an insured institution other than a California savings association and other than a federal association.

(d) “Insured institution” means an entity: (1) that is organized and licensed as a savings association, savings and loan association, or savings bank under the laws of another state of the United States and the deposits of which are insured by the Federal Deposit Insurance Corporation or (2) that is chartered by the Office of Thrift Supervision. However, “insured institution” does not include any savings bank of the type defined in Section 3(g) of the Federal Deposit Insurance Act (12 U.S.C. Sec. 1813(g)).

(e) The “principal place of deposits” of an entity is that state in which the total deposits of all of that entity’s depository operations and those of its affiliates are largest.

history: (History: Amended by Stats. 2004, Ch. 176, Sec. 5. Effective January 1, 2005.)

path: 2. SAVINGS ASSOCIATION LAW > 10. Foreign (National) Savings Companies


text:
(a) No person, other than a California savings association or other person authorized by this division, shall do any business of an association.

(b) No foreign savings association may control a California savings association.

(c) No foreign holding company may control a California savings association.

(d) The commissioner shall obtain an injunction or take other action necessary to prevent any person from unlawfully doing any business of an association in this state.

history: (History: Added by Stats. 1987, Ch. 1162, Sec. 19. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)

chapter: 10. Foreign (National) Savings Companies


text: Notwithstanding Section 10001, and subject to Section 10003, on and after January 1, 1991, a foreign savings association may conduct the business of an association in California or may acquire control of a California savings association, and a foreign holding company may acquire control of a California savings association; provided that, if the commissioner determines that the laws, court decisions, or practices of the jurisdiction under which the foreign savings association is incorporated or, in the case of a foreign holding company, the holding company’s principal place of deposits, would operate to prohibit, restrict, condition, or otherwise limit a California savings association from conducting the business of, or acquiring control of, a savings association in the relevant jurisdiction pursuant to the laws, court decisions, or practices of that jurisdiction, a similar prohibition, restriction, condition, or limitation to be prescribed by regulation or order of the commissioner shall apply in California to the foreign savings association or foreign holding company.

history: (History: Added by renumbering Section 10001 by Stats. 1987, Ch. 1162, Sec. 18. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)


text: No foreign savings association may conduct the business of an association in California, and no foreign savings association or foreign holding company may acquire control of a California savings association, without the written approval of the commissioner. A foreign savings association or foreign holding company shall submit to the commissioner a written application for approval in the form and shall pay such fees as the commissioner prescribes. The foreign savings association or foreign holding company shall submit with the application such information, data, and records as the commissioner may require in order to make his or her determination. The commissioner may issue such regulations as he or she deems to be appropriate to preserve the public interest and integrity of the state’s savings association system and to protect the interests of savings account holders, borrowers, and stockholders resident in this state. The commissioner may make arrangements with the supervisory officials of other states for reciprocal examination of California savings associations, foreign savings associations and foreign holding companies, and the imposition of fees therefor and may condition his or her approval pursuant to this chapter upon the existence of those arrangements.

history: (History: Added by renumbering Section 10002 by Stats. 1987, Ch. 1162, Sec. 20. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)


text: Except as expressly provided for in this chapter, any person who, as principal, agent, salesperson, solicitor, or in any other capacity, solicits or conducts in this state the business of selling, disposing of, taking, or soliciting savings accounts of any foreign savings association that has not complied with all the requirements of this chapter, is guilty of a public offense punishable by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail not exceeding one year, or by a fine not exceeding ten thousand dollars ($10,000), or by both that fine and imprisonment.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 106. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)


text:
For the purposes of this article and any other law of this state prohibiting, limiting, or regulating the doing of business or the selling, taking, or solicitation of savings accounts in this state by foreign savings associations or foreign corporations, any federally insured foreign savings association subject to state or federal supervision, which by law is subject to periodic examination by that supervisory authority and to a requirement of periodic audit, and any broker-dealer registered in accordance with the requirements of the Securities Exchange Act of 1934 and the Corporate Securities Law of 1968, and any partner, officer, director, branch manager, or person performing similar functions, and employees of that broker-dealer, shall not be considered to be doing business or selling, taking, or soliciting savings accounts in this state by reason of engaging in the following:

(a) (1) Any of the activities specified in subdivision (d) of Section 191 of the Corporations Code, or (2) the advertising or solicitation of savings accounts in this state by a federally insured foreign savings association through the media of the mail, radio, television, magazines, newspapers, or any other media that are published or circulated within this state, except through or as a result of telemarketing, provided that the advertising or solicitation as a whole is accurate and does not create a misleading impression even though statements considered separately are literally accurate. A federally insured foreign savings association shall not sell, take or solicit savings accounts through telemarketing by use of the telephone or telephone transceiving equipment, or through the use of an automatic dial-announcing device as defined in Section 2871 of the Public Utilities Code.

(b) The offering by a registered broker-dealer of, or the placement by a registered broker-dealer of a customer’s funds into, a savings account at a federally insured foreign savings association chartered under the laws of a state in which broker-dealers make available savings accounts of associations chartered under the laws of this state, provided that (1) any advertising, offering material, or solicitation as a whole is accurate and does not create a misleading impression even though statements considered separately are literally accurate and (2) the savings accounts of the federally insured foreign savings association are rated “investment grade” by either Standard & Poor’s Corporation or Moody’s Investors Service, Inc. based upon the foreign savings association’s ability to repay the savings accounts independent of federal deposit insurance benefits.

history: (History: Amended (as amended by Stats. 1991, Ch. 1206, Sec. 3) by Stats. 1993, Ch. 469, Sec. 9. Effective January 1, 1994.)


text: Except as provided by regulation, this division applies to a foreign savings association or its holding company as if business conducted in this state were that of a California savings association.

history: (History: Added by Stats. 1987, Ch. 1162, Sec. 24. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)


text: If a foreign savings association is controlled by a foreign holding company, the requirements under this chapter applicable to both a foreign savings association and foreign holding company are required to be met.

history: (History: Added by Stats. 1987, Ch. 1162, Sec. 25. Effective September 26, 1987. Section operative January 1, 1991, pursuant to Section 10009.)


text: This chapter shall become operative on January 1, 1991.

history: (History: Added by renumbering Section 10003 by Stats. 1987, Ch. 1162, Sec. 21. Effective September 26, 1987. Note: This section prescribes a delayed operative date for Chapter 10 (added by Stats. 1986, Ch. 1057), commencing with Section 10000.)


text: This division is known and may be cited as the Check Sellers, Bill Payers and Proraters Law.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 1.)

chapter: 1. Definitions

path: 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS > 1. Definitions


text: Unless the context otherwise requires, the definitions set forth in this chapter govern the construction of this division.

history: (History: Enacted by Stats. 1951, Ch. 364.)

division: 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS


text: A check seller is a person: (a) who, for compensation, engages, in whole or in part, in the business of selling checks, drafts, money orders, or other commercial paper serving the same purpose, or receiving money as agent of an obligor for the purpose of paying to a person other than the check seller bills, invoices, or accounts of such obligor, or (b) who, without direct compensation and not as an authorized agent for a utility company, accepts money for the purpose of forwarding it to others in payment of utility bills.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 2.)


text: A prorater is a person who, for compensation, engages in whole or in part in the business of receiving money or evidences thereof for the purpose of distributing the money or evidences thereof among creditors in payment or partial payment of the obligations of the debtor.

history: (History: Amended by Stats. 1972, Ch. 999.)


text: A business agent, for the purpose of this division is a person who engages in business as a prorater as defined in Section 12002.1 as an incident to the business of advising, counseling, or directing persons in their investments, and in the organization and management of their affairs under an exclusive contract, the primary purpose of which is not the liquidation of existing indebtedness.

history: (History: Added by Stats. 1959, Ch. 1506.)


text: “Commissioner” means the Commissioner of Financial Protection and Innovation, or any deputy, investigator, auditor, or any other person employed by the commissioner.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 110. (SB 1498) Effective January 1, 2023.)


text: “Licensee” means any individual or corporation licensed by the commissioner to engage in the business of a business agent, and any corporation licensed by the commissioner 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 or to accept money in payment of utility bills except as an authorized agent for a utility company pursuant to the provisions of this division.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 3.)


text: “Mobile unit” means a vehicle or other movable means from which the business of selling checks, drafts, or money orders is conducted.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 4.)


text:
This division does not apply to any of the following:

(a) Any person, or his or her authorized agent, doing business under license and authority of the Commissioner of Financial Institutions under Division 1 (commencing with Section 99) or under any law of this state or of the United States relating to banks, trust companies, building or savings associations, industrial loan companies, personal property brokers, credit unions, title insurance companies or underwritten title companies, as defined in Section 12402 of the Insurance Code, escrow agents subject to Division 6 (commencing with Section 17000), or finance lenders subject to Division 9 (commencing with Section 22000).

(b) (1) Any person licensed under Chapter 14A (commencing with Section 1851) of Division 1 or any agent of the person, when selling any traveler’s check, as defined in Section 1852, which is issued by the person.

(2) Any person licensed under Division 16 (commencing with Section 33000) or any agent of the person, when selling any payment instrument, as defined in Section 33059, which is issued by the person.

(c) The services of a person licensed to practice law in this state, when the person renders services in the course of his or her practice as an attorney-at-law, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.

(d) Any transaction in which money or other property is paid to a “joint control agent” for disbursal or use in payment of the cost of labor, materials, services, permits, fees, or other items of expense incurred in construction of improvements upon real property.

(e) A merchant-owned credit or creditors association, or a member-owned, member-controlled, or member-directed association whose principal function is that of servicing the community as a reporting agency.

(f) Any agency or service subject to Title 2.91 (commencing with Section 1812.500) of Part 4 of Division 3 of the Civil Code, when providing services under that title.

(g) Any person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code, when acting in any capacity for which he or she is licensed under that part.

(h) A common law or statutory assignment for the benefit of creditors or the operation or liquidation of property or a business enterprise under supervision of a creditor’s committee.

(i) The services of a person licensed as a certified public accountant or a public accountant in this state, when the person renders services in the course of his or her practice as a certified public accountant or a public accountant, and the fees and disbursements of the person, whether paid by the debtor or other person, are not charges or costs and expenses regulated by or subject to the limitations of this chapter. These fees and disbursements shall not be shared, directly or indirectly, with the prorater or check seller.

(j) Any person licensed under Chapter 14 (commencing with Section 1800) of Division 1 or any agent of the person, when selling any check or draft that is drawn by the person and is of the type described in paragraph (3) of subdivision (a) of Section 1800.5.

(k) Any group of banks each of which is organized under the laws of a nation other than the United States and one or more of which are licensed by the Commissioner of Financial Institutions under Article 3 (commencing with Section 1750) of Chapter 13.5 of Division 1, or any agent of the group, when selling any foreign currency traveler’s check, as defined in Section 1852, issued by the group. Each bank that is a member of the group is jointly and severally liable to pay the foreign currency traveler’s check.

(l) Any transaction of the type described in Section 1854.1.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 171. Effective January 1, 2007.)

chapter: 2. Application of Division

path: 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS > 2. Application of Division


text: In any proceeding under this law, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

history: (History: Added by Stats. 1978, Ch. 778.)


text: Any person who willfully violates any provision of this division, or who willfully violates any rule or order under this division, shall, upon conviction, be fined not more than ten thousand dollars ($10,000), or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail for not more than one year, or be punished by both that fine and imprisonment, but no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not preclude the commissioner from exercising the authority provided in Section 12400.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 107. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)


text: A licensee under this division or any person engaged in the same type of business as licensed under this division whether said person is licensed or not shall be deemed to be an agent as defined under Sections 506 and 506a of the Penal Code and subject to the penalties under said sections.

history: (History: Added by Stats. 1953, Ch. 807.)


text: Whenever in the opinion of the commissioner any person is engaged in business as a check seller as defined in this division without a license from the commissioner, or any person or licensee is violating any provision of this division, the commissioner may order the person or licensee to desist and to refrain from engaging in such business or further violating this division. If, after an order has been served, a request for a hearing is filed in writing within 30 days of the date of service of the order by the person to whom the order was directed, a hearing shall be held in accordance with the Administrative Procedure Act (Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code), and the commissioner shall have all of the powers granted under that chapter. Unless the hearing is commenced within 15 business days after the request for a hearing is filed or the person affected consents to a later date, the order is rescinded.

history: (History: Amended by Stats. 2015, Ch. 110, Sec. 1. (AB 1113) Effective January 1, 2016.)


text:
A nonprofit community service organization that meets all of the following criteria shall be exempt from any requirements imposed on proraters pursuant to this division:

(a) The nonprofit community service organization incorporates in this state or any other state as a nonprofit corporation and operates pursuant to either the Nonprofit Public Benefit Corporation Law, Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code or the Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code.

(b) The nonprofit community service organization limits its membership to retailers, lenders in the consumer credit field, educators, attorneys, social service organizations, employer and employee organizations, and related groups that serve educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes.

(c) The nonprofit community service organization has as its principal functions all of the following:

(1) Consumer credit education.

(2) Counseling on consumer credit problems and family budgets via in-person, telephone, and virtual communication.

(3) Arranging or administering debt management plans. “Debt management plan” means a method of paying debtor’s obligations in installments on a monthly basis.

(4) Arranging or administering debt settlement plans. “Debt settlement plans” means a method of paying debtor’s obligations in a negotiated amount to each creditor on a one-time basis.

(d) (1) The nonprofit community service organization receives from a debtor no more than the following maximum amounts to offset the organization’s actual and necessary expenses for the services described in subdivision (c):

(A) For education and counseling combined in connection with debt management or debt settlement services, a one-time sum not to exceed one hundred dollars ($100).

(B) For debt management plans, a sum not to exceed 15 percent of the money disbursed monthly, or seventy-five dollars ($75) per month, whichever is less.

(C) For debt settlement plans, a sum not to exceed 15 percent of the amount of the debt forgiven for negotiated debt settlement plans.

(2) A nonprofit community service organization shall not require any upfront payments or deposits on debt settlement plans and may require payment of fees only once the debt has been successfully settled.

(3) For purposes of this subdivision, a household shall be considered one debtor.

(4) The fees allowed pursuant to this subdivision shall be the only fees that may be charged by a nonprofit community service organization for any services related to a debt management plan or a debt settlement plan.

(e) The nonprofit community service organization maintains and keeps current and accurate books, records, and accounts relating to its business in accordance with generally accepted accounting principles and stores them in a readily accessible place for a period of no less than five years from the end of the fiscal year in which any transactions occurred.

(f) The nonprofit community service organization deposits any money received from a debtor for the services described in subdivision (c) in a noninterest-bearing trust account in a federally insured state or federal bank, savings bank, savings and loan association, or credit union, which account is maintained specifically for purposes of administering a debt management plan or debt settlement plan. The nonprofit community service organization shall provide to the commissioner both of the following before engaging in business in this state and claiming this exemption:

(1) (A) A written notice with the name, address, and telephone number of the bank, savings bank, savings and loan association, or credit union where the trust account is maintained, and the name of the account and the account number.

(B) The account information required by this paragraph shall be kept confidential pursuant to the laws governing disclosure of public records, including the California Public Records Act, Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code, and the rules adopted thereunder.

(2) An irrevocable written consent providing that upon the commissioner taking possession of the property and business of the nonprofit community service organization, all books, records, property, and business, including trust accounts and any other accounts holding debtors’ funds, shall be immediately turned over to the commissioner or receiver appointed pursuant to this division. The consent shall be signed by the nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union where the trust account is maintained. The consent shall be binding upon the nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union, and any objection to it shall be raised pursuant to the laws of the state and only in the forum in which the proceeding to take possession or appointment of the receiver has been filed. The nonprofit community service organization and the bank, savings bank, savings and loan association, or credit union shall further consent to the jurisdiction of the commissioner for the purpose of any investigation or proceeding under Sections 12105 and 12106 or any other provision of this division. The consent required by this paragraph shall include the name, title, and signature of an official of the bank, savings bank, savings and loan association, or credit union holding the authority to consent on behalf of that institution, and the name, title, and signature of the chief executive officer or president of the nonprofit community service organization.

(g) (1) The nonprofit community service organization maintains at all times a surety bond in the amount of one hundred thousand dollars ($100,000) issued by an insurer licensed in this state.

(2) The bond required by this subdivision shall be conditioned upon all of the following:

(A) The obligor faithfully conforming to and abiding by the provisions of this section.

(B) The obligor honestly and faithfully applying all funds received.

(C) The obligor honestly and faithfully performing all obligations and undertakings required under this section.

(D) The obligor paying to the state and to any person all money that becomes due and owing to the state or to any person owed by the obligor of the bond.

(h) The nonprofit community service organization reports all of the following to the debtor at least once every three months, or upon the debtor’s request, for any debt management plan or debt settlement plan:

(1) Total amount received from the debtor.

(2) Total amount paid to each creditor.

(3) Total amount any creditor has agreed to accept as payment in full on any debt owed by the debtor.

(4) Any amount paid to the organization by the debtor.

(5) Any amount held in reserve.

(i) The nonprofit community service organization submits to the commissioner, at the organization’s expense, an audit report containing audited financial statements covering the calendar year or, if the organization has an established fiscal year, then for that fiscal year, within 120 days after the close of the calendar or fiscal year.

(j) The nonprofit community service organization submits with the annual financial statements required under subdivision (i) a declaration that conforms to Section 2015.5 of the Code of Civil Procedure, is executed by an official authorized by the board of the organization, and that states that the organization complies with this section. The annual financial statements shall also include a separate written statement that identifies the name, address, contact person, and telephone number of the organization.

(k) The nonprofit community service organization maintains accreditation by an independent accrediting organization, including either the Council on Accreditation or the International Standards Organization, with sector certification.

(l) The nonprofit community service organization does not engage in any act or practice in violation of Section 17200 or 17500 of the Business and Professions Code.

(m) The nonprofit community service organization inserts the following statement, in not less than 10-point type, in its debt management plan and debt settlement plan agreements: “Complaints related to this agreement may be directed to the California Department of Financial Protection and Innovation. This nonprofit community service organization has adopted best practices for debt management plans and debt settlement plans, and a copy will be provided upon request.”

(n) The nonprofit community service organization adopts and implements on a continuous basis policies or procedures of best practices that are designed to prevent improper debt management or debt settlement practices and prevent theft and misappropriation of funds. Failure to do any of the following shall constitute improper debt management or debt settlement practices, as applicable:

(1) Obtain and maintain counselor certification conducted by a nationally recognized third-party certification program that certifies that all of the organization’s counselors receive proper training and continuing education and are qualified to provide financial assistance prior to performing counseling services in this state.

(2) Disburse funds no later than 15 days after receipt of valid funds, or by a scheduled disbursement date, whichever is the greater amount of time.

(3) Transmit funds utilizing electronic payment processing when available.

(4) Implement an inception date policy, which shall include an agreement that a consumer’s first disbursement pursuant to a debt management plan shall be received within 90 days of agreeing to the debt management plan service. The debt management plan shall include all items described in subdivision (h) and shall be provided to the consumer at the inception date of the plan. A description of best practices of the organization and of the consumer complaint resources shall be issued no later than the first payment date.

(5) Respond to and research any complaint initiated by a consumer within five business days of receipt of the complaint.

(6) Prohibit a policy requiring debt management plan consumers from being required to utilize additional ancillary services.

(7) Provide consumer access to debt management plan services regardless of the consumer’s ability to pay fees related to the debt management plan, lack of creditor participation, or the amount of the consumer’s outstanding debt.

(8) Implement policies that specifically prohibit credit counselors from receiving financial incentives or additional compensation based on the outcome of the counseling process.

(9) Prohibit the practice of paying referral fees to consumers or other third parties that are contingent upon the enrollment of consumers by the organization.

(10) Disclose in all written contracts with consumers the portion of funding for the organization that is provided by creditors.

(11) Disclose in all written contracts for debt management plans or debt settlement plans that these plans are not suitable for all consumers and that consumers may request information on other options, including, but not limited to, bankruptcy.

(12) Fully disclose all services to be provided by the organization and any initial and ongoing fees to be charged by the organization for services, including, but not limited to, contributions to the organization.

(13) Prohibit the organization or any affiliate of the organization from purchasing debt from a consumer.

(14) Prohibit the organization from offering loans to consumers involving the charging of interest.

(15) Prominently disclose in written contracts with consumers of any financial arrangement between the organization and any lender or any provider of financial services if the organization receives any form of compensation for referring consumers to that lender or provider of financial services.

(16) Provide professional liability insurance coverage.

(17) Provide the debtor a written individualized evaluation of the debtor’s financial status and an initial debt management plan for the debtor’s debts with specific recommendations regarding actions the debtor should take.

(18) (A) Provide the debtor enrolling in a debt management plan a written reliable estimate of the length of time it will take to complete the plan that identifies the total debt owed to each creditor included in the plan, the proposed payment to each creditor, and any fees that would be charged for administering the plan.

(B) The estimate required by this paragraph shall be provided before receipt of the debtor’s first deposit.

(o) The nonprofit community service organization provides a copy of the best practices described in subdivision (n) to its debtor, upon request.

(p) The nonprofit community service organization resolves in a prompt and reasonable manner complaints from debtors relating to the organization’s debt management plans or debt settlement plans.

(q) The nonprofit community service organization provides written notice to the commissioner within 30 days of dissolution or termination of engaging in the activities of a prorater, as defined in Section 12002.1.

(r) This section shall become inoperative upon the enactment of a statute requiring the licensure and regulation of nonprofit community service organizations providing consumer credit counseling.

history: (History: Amended by Stats. 2024, Ch. 178, Sec. 1. (SB 985) Effective January 1, 2025. Section conditionally inoperative as provided in subd. (r).)


text:
(a) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this division, or any rule or order promulgated pursuant to this division, the commissioner may, at his or her discretion, bring an action in the name of the people of the State of California in the superior court to enjoin the acts or practices or to enforce compliance. Upon a proper showing, a permanent or preliminary injunction, a regaining order, or a writ of mandate shall be granted and a receiver or conservator may be appointed for the defendant’s assets.

(b) If the commissioner determines it is in the public interest, the commissioner may include in any action under this division a claim for ancillary relief, including, but not limited to, a claim for restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action, and the administrative or civil court shall have jurisdiction to award an additional relief.

(c) The commissioner may, after appropriate notice and opportunity for hearing, levy administrative penalties against any person or licensee who violates any provision of this division, or rule or order promulgated pursuant to this division, in an amount not to exceed two thousand five hundred dollars ($2,500) per violation. Any hearing shall be held in accordance with the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all of the powers granted under this act. If no hearing is requested within 30 days from the date of service of the order, the order shall become final.

(d) Any licensee or person who willfully violates any provision of this division, or any rule or order thereunder, shall be liable for a civil penalty not to exceed ten thousand dollars ($10,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the commissioner in any court of competent jurisdiction.

(e) In any action brought under this division, the commissioner is entitled to receive costs, which in the discretion of the administrative or civil court shall include an amount representing reasonable attorney’s fees and any related expenses for services rendered.

history: (History: Added by Stats. 2002, Ch. 779, Sec. 5. Effective January 1, 2003.)


text:
(a) The commissioner may do the following, at his or her discretion:

(1) Make public or private investigations within or outside of this state necessary to determine whether any person has violated, or is about to violate, any provision of this division or any rule or order promulgated pursuant to this division, or to aid in the enforcement of the law.

(2) Make public any information concerning any violation of this division or any rule or order promulgated pursuant to this division.

(b) For the purpose of any investigation or proceeding under this section, the commissioner or any officer designated by the commissioner may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records the commissioner deems relevant or material to the inquiry.

(c) In case of refusal to obey a subpoena issued to a person, the superior court may upon application by the commissioner issue to the person an order requiring the person to appear before the commissioner, or an officer designated by the commissioner, and produce documentary evidence, if so ordered, or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt.

(d) No person is excused from attending or testifying, or from producing any document or record, before the commissioner or in obedience of a subpoena of the commissioner, or any officer designated by the commissioner, or in any proceeding instituted by the commissioner, on the ground that the testimony or evidence required of the person may incriminate the person or subject the person to a penalty or forfeiture. However, after validly claiming the privilege against self-incrimination, no individual may be prosecuted or subjected to any penalty or forfeiture for, or on account of, any transaction, matter, or thing for which the person is compelled to testify or produce pursuant to this section, except that the individual testifying is not exempt from prosecution and punishment for perjury or contempt committed in testifying.

(e) The cost of any review, examination, audit, or investigation made by the commissioner under this section shall be paid to the commissioner by the person subject to the review, examination, audit, or investigation, and the commissioner may maintain an action for the recovery of these costs in any court of competent jurisdiction. In determining the cost, the commissioner may use the actual amount of the salary or other compensation paid to the persons making the review, examination, audit, or investigation plus the actual amount of expenses, including overhead reasonably incurred in the performance of the work.

history: (History: Added by Stats. 2002, Ch. 779, Sec. 6. Effective January 1, 2003.)


text:
(a) If, upon inspection or investigation, based upon a complaint or otherwise, the department has cause to believe that a person is engaged in business without a license, or a person or licensee is violating any provision of this division or any rule or order promulgated pursuant to this division, the department may issue a citation to that person in writing describing with particularity the basis of the citation. Each citation may contain an order to desist and refrain and an assessment of an administrative penalty not to exceed two thousand five hundred dollars ($2,500). All penalties collected under this section shall be deposited in the State Corporations Fund.

(b) The sanctions authorized under this section shall be separate from, and in addition to, all other administrative, civil, or criminal remedies.

(c) If within 30 days from the receipt of the citation, the person cited fails to notify the department that the person intends to request a hearing as described in subdivision (d), the citation shall be deemed final.

(d) Any hearing under this section shall be conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(e) After the exhaustion of the review procedures provided for in this section, the department may apply to the appropriate superior court for a judgment in the amount of the administrative penalty and order compelling the cited person to comply with the order of the department. The application shall include a certified copy of the final order of the department and shall constitute a sufficient showing to warrant the issuance of the judgment and order.

history: (History: Added by Stats. 2002, Ch. 779, Sec. 7. Effective January 1, 2003.)


text:
(a) The remedies available to the commissioner pursuant to this division are not exclusive and may be sought and employed in any combination deemed advisable by the commissioner to enforce the provisions of this division.

(b) Any amounts collected by the commissioner in any action shall be paid into the State Corporations Fund.

history: (History: Added by Stats. 2002, Ch. 779, Sec. 8. Effective January 1, 2003.)


text: 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.

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

chapter: 3. Licensing

path: 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS > 3. Licensing


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

history: (History: Added by Stats. 1959, Ch. 367.)


text:
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.

history: (History: Added by Stats. 1957, Ch. 498.)


text:
(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 Financial Protection and Innovation 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.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 113. (SB 1498) Effective January 1, 2023.)


text: 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.

history: (History: Enacted by Stats. 1951, Ch. 364.)


text: 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.


text: 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.

history: (History: Amended by Stats. 1953, Ch. 807.)


text:
(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.

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


text:
(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.

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


text: 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.

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


text: 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.

history: (History: Amended by Stats. 1957, Ch. 186.)


text: 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.


text: 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.


text: 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.


text:
(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.

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


text:
(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.

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


text:
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.

history: (History: Amended by Stats. 1953, Ch. 642.)


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

history: (History: Amended by Stats. 1955, Ch. 339.)


text: The license is not transferable or assignable.


text: 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.

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


text:
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.

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


text: 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.

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


text: 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).

history: (History: Added by Stats. 1955, Ch. 339.)


text: The commissioner may make general rules and regulations and specific rulings, demands, and findings for the enforcement of this division.

chapter: 4. Licensee Regulations

path: 3. CHECK SELLERS, BILL PAYERS, AND PRORATERS > 4. Licensee Regulations


text: Licensees shall observe reasonable precautions against theft or alteration of checks, drafts or money orders, and against burglary or holdup.

history: (History: Added by Stats. 1963, Ch. 1817.)


text: Every person engaging in the business of a check seller shall conduct the business under his or her true name unless he or she has complied with Chapter 5 (commencing with Section 17900) of Part 3 of Division 7 of the Business and Professions Code.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 9.)


text:
All funds received by a licensee or its agents from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose and for the purpose of paying bills, invoices, or accounts of an obligor, equal in amount to the face value of such instruments or equal to the amount to be paid, shall constitute trust funds owned by and belonging to the person from whom they were received or a licensee who has paid the checks, drafts, money orders or other commercial paper serving the same purpose, for which the funds of such persons have been received by the agent but not transmitted to such licensee or deposited in the trust account of such licensee. If a licensee or an agent of a licensee shall commingle such funds with those of his own, all assets of such agent shall be impressed with a trust in favor of said purchaser or the licensee in an amount equal to the aggregate funds received or which should have been received by the agent from such sale. Such trust shall continue until an amount equal to said funds is separated from those of the agent and transmitted to the licensee or deposited in the trust account of licensee. An amount equal to all such trust funds shall be deposited in a bank or banks in an account or accounts in the name of the licensee designated “trust account,” or by some other appropriate name indicating that the funds are not the funds of the licensee or of its officers, employees, or agents. Such funds, or, in the event of commingling of such funds by licensee or its agent with those of the licensee or its agent, an amount of funds of such licensee or of its agent equal thereto, shall constitute trust funds as herein provided and shall not be subject to attachment, levy of execution or sequestration by order of court except by a payee, or bona fide assignee, or bona fide holder in due course of a check, draft, or money order sold by a licensee, or except by an obligor for whom a licensee is acting as an agent in paying bills. Funds in said account, together with funds and checks on hand and in the hands of agents held for the account of the licensee, at all times shall be at least equal to the aggregate liablity of the licensee on account of checks sold and bills, invoices, and accounts accepted for payment.

Upon request of the commissioner, a licensee shall furnish to the commissioner an authorization for examination of financial records of any such trust fund account, maintained in a financial institution, in accordance with the procedures set forth in Section 7473 of the Government Code.

Nothing in this law shall be construed to prevent a purchaser, a holder in due course, the payee of a check, draft or money order sold by the licensee in the usual course of his business, or an obligor for whom the licensee is acting as an agent in paying bills of the obligor, from taking any legal action necessary to enforce any claims which said purchaser, holder in due course, payee, or obligor may desire to take including the right to levy attachment or execution.

In the event a license under this law shall be suspended or terminated the licensee shall immediately deposit in said trust account an amount which with funds therein contained shall be equal to the outstanding checks sold and bills unpaid.

history: (History: Amended by Stats. 1976, Ch. 1320.)


text:
Prior to such separation and transmittal to the licensee or deposit by its agent such funds received by said agent may be used by said agent for the sole purpose only of the making of change or cashing of checks in the normal course of its business. All such funds received by said agent to the date of deposit or transmittal as required below or an amount equal to such funds must be separated from those of the agent and transmitted to, or deposited in the trust account of, the licensee not less than every third business day. If an agent owns or operates, either directly or indirectly, more than two locations for the sale of checks, drafts, money orders, or other commercial paper serving the same purpose and/or for the receipt of money for the purpose of paying bills, invoices or accounts of an obligor, and handles trust funds in any three-day period equal to or in excess of securities to be deposited as provided in Section 12223, said agent shall transmit to, or deposit in the trust account of, the licensee directly from each such location of such agent such funds not later than the end of the next business day following receipt; such funds to be in form of cash or checks cashed in the normal course of business only.

Where the total amount of such funds held by an agent does not exceed one thousand dollars ($1,000) in a calendar week, the commissioner may, in his discretion, by written order permit the agent to transmit or deposit such funds in periods in excess of 3 days but not more than 10 days.

If, after reasonable notice from licensee, an agent shall fail to transmit or deposit the funds, or an amount equal thereto, or to report to the licensee, as herein provided without just cause, or if an agent shall use any of such funds, directly or indirectly, for any purpose other than is permitted herein, licensee shall immediately terminate such agency and within five (5) days thereafter notify the commissioner in writing of the reason for such termination, setting forth the name and address of the agency location. No agent so terminated shall be permitted to become an agent of the licensee or any other licensee except as provided in Section 12301.4 of the Financial Code.


text: An amount equal to all such funds received by a licensee shall be separated from the funds of the licensee and deposited in its trust account not later than the end of the next business day following receipt by such licensee. All such funds shall thereafter remain in such trust account and may be used for no purpose other than paying bills of said persons, or paying checks, drafts, money orders, or other commercial paper sold by the licensee except as otherwise provided in Section 12300.6.


text:
Prior to separation and deposit by the licensee such funds may only be used by the licensee for the making of change or the cashing of checks in the normal course of its business, and then only to the extent of the amount of the bond which has been filed under Section 12206.

After separation and deposit such funds also may be used by a licensee for the cashing of checks in the normal course of its business, and then only to the extent of the amount of the bond which has been filed with the commissioner containing the provisions and conditions set forth in Sections 12207 through 12213, inclusive, of this code.


text: A licensee may establish branch offices or agencies if it is qualified under the provisions of Section 12205 and if it expressly assumes responsibility for the acts of any person selling checks, drafts, or money orders for the licensee or accepting money in its name or on its behalf at such place of business. There shall be posted in a prominent place in each branch office or agency a sign stating that the place of business is a branch office or agency of the licensee. The licensee is responsible for the acts of any person selling checks, drafts, or money orders or accepting money in its name or on its behalf.

history: (History: Amended by Stats. 1983, Ch. 660, Sec. 10.)


text: A licensee within 10 days after establishing a mobile unit, a branch office or agency location shall notify the commissioner in writing and shall furnish the commissioner with the name and address of each such branch office or agency location and the California state registration number or other identification of the mobile unit and the area in which it proposes to operate such mobile unit and such other information as the commissioner may require so that he may be continuously advised of every location at which checks, drafts, or money orders of the licensee are being sold or issued. Within five days after the termination of a mobile unit, a branch office or agency location a licensee shall inform the commissioner of the name and address of the branch office or agency location terminated and the California state registration number or other identification of the mobile unit terminated, together with a statement of the reasons for the termination.

history: (History: Amended by Stats. 1963, Ch. 1817.)


text: A check, draft, or money order sold by a licensee shall be drawn on an account of a licensee maintained at a bank authorized to do business in the State of California.

history: (History: Added by Stats. 1953, Ch. 632.)


text: A licensee shall not permit any officer, employee, or agent to sell any check, draft, or money order unless the signature of the person signing the same is on file with the bank on which the check, draft, or money order is drawn or the licensee shall have filed with the bank and the commissioner written authorization to said bank to pay any checks, drafts, or money orders presented for payment on a form of the licensee as described in the authorization except as to items as to which licensee has filed a stop payment notice with said bank.


text: A licensee shall terminate and cancel any agency immediately upon instruction from the commissioner and when it has been established (a) that the agent has refused to permit the examination of its books, accounts, records, and files; (b) that an examination has revealed a shortage in its accounts relating to the sale of checks; (c) that the agent after specific instruction to do so has failed to remit to the licensee or deposit in its trust account within the time specified in Section 12300.4 funds received from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose or funds received for the purpose of paying bills, invoices, or accounts of an obligor; (d) that the agency has violated any provision of this chapter. No agency terminated and canceled by a licensee pursuant to or for the reasons set forth in this section shall be re-established by said licensee or established by any other licensee until after the written consent of the commissioner is given to the establishment or re-establishment of such agency. If the licensee or the agent requests a hearing with respect to such termination, the commissioner shall thereupon hold a hearing within 10 days after receiving such request. If the commissioner finds that the violations were purely technical and do not substantially affect the agent’s ability to perform his duties as such agent, or if the commissioner finds that such violations did not occur, the commissioner shall issue an order vacating his said notice to the licensee.


text: No agent of a licensee shall issue or cause to be issued any check, draft, or money order, or other commercial paper serving the same purpose which is drawn upon the trust account of a licensee without concurrently receiving in full, in cash, or by check, draft, or money order from a third party believed to be valid, the principal amount thereof.


text: Whenever a licensee desires to change his place of business to a street address other than that designated in his license or desires to change the place or area of doing business in the case of a mobile unit, he shall give written notice to the commissioner of the desired change.

history: (History: Amended by Stats. 1953, Ch. 807.)


text:
Every licensee shall keep and use in his business books, accounts and records in accordance with good accounting practice and which will enable the commissioner to determine whether such licensee has violated the provisions of this division or the rules and regulations made by the commissioner. Every licensee shall preserve such books, accounts and records for at least four years after making the final entry on each transaction recorded therein. Such books, accounts and records shall be kept current, shall be maintained at the main office of the licensee and shall be available for inspection by the commissioner on demand during regular business hours.

Nothing in this section shall be construed to require any licensee to keep an individual record of each individual fee charged in each transaction but the licensee shall be required to keep a record of the total charges made for any accounting period.


text:
(a) Each licensee, except a special prorater, shall submit to the commissioner, at such licensee’s own expense, an audit report containing audited financial statements covering the calendar year or, if such licensee has an established fiscal year, then for such fiscal year, within 105 days after the close of each such calendar or fiscal year. At such time, each licensee shall also file such additional relevant information as the commissioner may require.

(b) Within 30 days after receipt of a request from the commissioner, a licensee or other person subject to this division shall submit to the commissioner, at such person’s own expense, an audit report containing audited financial statements covering the 12 calendar months next preceding the month of receipt of the request, or such other period as the commissioner may require. Unless the public interest shall otherwise require, the commissioner shall exempt a licensee from the provisions of subdivision (a) hereof, in whole or in part, if such licensee has complied with a request pursuant to this subdivision (b) for financial statements as of a date within the calendar or fiscal year for which such exemption is granted.

(c) A licensee whose license has been surrendered or revoked shall submit to the commissioner, at its own expense, on or before 105 days after the effective date of such surrender or revocation, a closing audit report containing audited financial statements as of such effective date for the 12 months ending with such effective date, or for such other period as the commissioner may specify. Such report shall include the information required by subdivision (a) of this section and other relevant information specified by the commissioner. A licensee who has complied with this subdivision is exempted from subdivision (a) hereof.

(d) The reports and financial statements referred to in subdivisions (a), (b), and (c) of this section shall include at least a balance sheet and a statement of income for the year ended on the balance sheet date together with such other relevant information as the commissioner may require, and shall be prepared in accordance with generally accepted accounting principles and shall be accompanied by a report, certificate or opinion of an independent certified public accountant or independent public accountant. The audits shall be conducted in accordance with generally accepted auditing standards and the rules and regulations of the commissioner.

(e) A licensee shall make other special reports to the commissioner as the commissioner may from time to time require.

(f) For good cause and upon written request, the commissioner may extend the time for compliance with subdivisions (a), (b) and (c) of this section.

(g) A licensee shall, when requested by the commissioner, for good cause, submit its unaudited financial statement, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet and statement of income as of the date and for the period specified by the commissioner. The commissioner may require the submission of such reports on a monthly or other periodic basis.

(h) If the report, certificate or opinion of the independent accountant referred to in subdivision (d) hereof is in any way qualified, the commissioner may require the licensee to take such action as he deems appropriate to permit an independent accountant to remove such qualification from the report, certificate or opinion.

(i) The commissioner may reject any financial statement, report, certificate or opinion filed pursuant to this section by notifying the licensee or other person required to make such filing of its rejection and the cause thereof. Within 30 days after the receipt of such notice, the licensee or other person shall correct such deficiency, and the failure so to do shall be deemed a violation of this division. The commissioner shall retain a copy of all filings so rejected.

(j) The commissioner may make rules and regulations specifying the form and content of the reports and financial statements referred to in this section, and may require that such reports and financial statements be verified by the licensee in such manner as he may prescribe.

history: (History: Amended by Stats. 1969, Ch. 223.)


text: For the purpose of discovering violations of this division the commissioner may at any time investigate the business and examine the books, accounts, records, and files used therein, of any licensee, of any agent, and of any person who the commissioner has reason to believe is engaging in the business defined in this division.


text: The cost of every examination of a licensee or other person subject to this division shall be paid to the commissioner by the licensee or person examined, and the commissioner may maintain an action for the recovery of these costs in any court of competent jurisdiction. In determining the cost of an examination, the commissioner may use the estimated average hourly cost for all persons performing examinations of licensees or other persons subject to this division for the fiscal year. For the purposes of this section only, no person other than a licensee shall be deemed to be a person subject to this division unless and until the person is determined to be a person subject to this division by an administrative hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code or by a judicial hearing in any court of competent jurisdiction.

history: (History: Amended by Stats. 1981, Ch. 946, Sec. 1.)


text: The commissioner may require the attendance of witnesses and examine under oath all persons whose testimony he requires relative to any examination or investigation.

history: (History: Enacted by Stats. 1951, Ch. 364.)


text: The commissioner may commence and prosecute actions and proceedings to enjoin violations of this division or violations of orders or decisions of the commissioner rendered pursuant to this division, and for the enforcement of any and all civil penalties provided for by this division.

history: (History: Added by Stats. 1953, Ch. 1031.)


text: If the commissioner finds as a result of an examination or report that a licensee is insolvent or has been insolvent or is conducting or has conducted business in such an unsafe or injurious manner as to render its further operations hazardous to the public, the commissioner may forthwith by an order addressed to and served on the licensee by registered mail and on any other person having funds of the licensee or its customers in their possession, direct discontinuance of the disbursement of such funds and the further conduct of business by the licensee. The order shall be conditioned to remain in effect unless the commissioner fails to hold a hearing within 15 days after receipt of a written request by the licensee, until set aside by the commissioner in whole or in part, until the licensee is the subject of an order for relief in bankruptcy, or pursuant to a petition filed by the commissioner or other interested person a receiver has been appointed by a court of competent jurisdiction.

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 8. (AB 2433) Effective January 1, 2023.)


text:
Whenever as a result of an examination or report it appears to the commissioner that:

(a) The capital of any licensee is impaired;

(b) Any licensee is conducting its business in such an unsafe or injurious manner as to render its further operations hazardous to the public;

(c) Any licensee has suspended payment of its trust obligations;

(d) Any licensee has refused to submit its books, papers, and affairs to the inspection of an examiner of the Division of Corporations;

(e) Any officer of any licensee refuses to be examined under oath touching the concerns of such licensee;

(f) Any licensee neglects or refuses to comply with any order of the commissioner made pursuant to this division unless the enforcement of such order is restrained in a proceeding brought by such licensee; the commissioner may forthwith take possession of the property and business of such licensee and retain possession until such licensee resumes business or its affairs be finally liquidated as herein provided. Such licensee, with the consent of the commissioner, may resume business upon such terms as he may prescribe.


text: Whenever the commissioner has taken possession of the property and business of a licensee the commissioner may petition the superior court for the appointment of a receiver to liquidate the affairs of the licensee. During the time that the commissioner retains possession of the property and business of a licensee the commissioner shall have the same powers and authority with reference to the licensee as are vested in the Commissioner of Financial Institutions with respect to banks pursuant to Chapter 17 (commencing with Section 3100) of Division 1 and the licensee shall likewise have the same rights to hearings and judicial review as are granted to banks. While in possession of the property and business of a check seller, a receiver shall have the same powers and authority as are vested in the Commissioner of Financial Institutions while in possession of the property and business of a bank.

history: (History: Amended by Stats. 2000, Ch. 1015, Sec. 50. Effective September 30, 2000.)