BILL ANALYSIS Ó SENATE COMMITTEE ON BANKING AND FINANCIAL INSTITUTIONS Senator Marty Block, Chair 2015 - 2016 Regular Bill No: AB 1113 Hearing Date: June 17, 2015 ----------------------------------------------------------------- |Author: |Chau | |-----------+-----------------------------------------------------| |Version: |February 27, 2015 Introduced | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Eileen Newhall | | | | ----------------------------------------------------------------- Subject: Check Sellers, Bill Payers and Proraters Law. SUMMARY Specifies thirty days as the amount of time in which a person wishing to contest a desist and refrain order issued under the Check Sellers, Bill Payers, and Proraters Law has in which to request a hearing on the order from the Commissioner of Business Oversight (commissioner), as specified. DESCRIPTION 1. Specifies thirty days as the amount of time in which a person wishing to contest a desist and refrain order issued under the Check Sellers, Bill Payers, and Proraters Law has in which to request a hearing on the order from the commissioner. Provides that the thirty day period begins on the date the person to whom the order is directed is served with that order. 2. Provides that a desist and refrain order issued under the Check Sellers, Bill Payers, and Proraters Law is rescinded, if a hearing requested to contest that order is not commenced within 15 business days after the request for a hearing is filed, unless the person to whom the order is issued consents to a later date. EXISTING LAW 3. Provides for the Check Sellers, Bill Payers, and Proraters AB 1113 (Chau) Page 2 of ? Law (Financial Code Section 12000 et seq.), administered by the Department of Business Oversight (DBO; the Department). Defines a check seller under that law as a person who, for compensation, engages 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 bills, invoices, or accounts of such obligor, or 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 (Financial Code Section 12002). Defines a prorater under that law as 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 (Financial Code Section 12002.1). 4. Provides that, whenever in the opinion of the commissioner, any person is engaged in business as a check seller without a license from the commissioner, or any person or licensee is violating any provision of the Check Sellers, Bill Payers, or Proraters Law, or any rule or order issued pursuant to that law, the commissioner may order the person or licensee to desist and refrain from engaging in such business or further violating the law (Financial Code Section 12103). 5. Provides that if, after a desist and refrain order is issued, a request for a hearing is filed in writing by the person receiving the order, and no hearing is held within 30 days thereafter, the order is deemed rescinded (Financial Code Section 12103). COMMENTS 1. Purpose: AB 1113 is intended to specify the time frame within which a person served a desist and refrain order under the Check Sellers, Bill Payers, and Proraters Law must request a hearing to contest that order. 2. Background: Under the existing Check Sellers, Bill Payers, and Proraters Law, the commissioner is authorized to issue a desist and refrain order to an unlicensed person operating AB 1113 (Chau) Page 3 of ? without a needed license or to a licensee operating in violation of the law. The person to whom the order is issued may request an administrative hearing to contest the order, but the law does not specify the time frame within which that request must be submitted. This lack of specificity creates uncertainty regarding whether and when an order becomes final. Unless an order is final, the commissioner cannot enforce it via a civil action. AB 1113 establishes a thirty day period as the amount of time in which the person served with a desist and refrain order has in which to request a hearing in writing on that order from the commissioner. The bill further clarifies that, if a hearing is not held within fifteen days following the commissioner's receipt of a request for a hearing, the order is deemed rescinded. These time frames are different than those currently observed by DBO, and more beneficial to persons served with desist and refrain orders. At present, when the Department issues a desist and refrain order under the Check Sellers, Bill Payers, and Proraters Law, it sends a cover letter informing the recipient of the order of the commissioner's authority to issue orders and the recipient's right to an administrative hearing, if they wish to challenge the order. The letter notes that any request for a hearing must be made within 15 days after service of the order. 3. Discussion: Although the provisions of AB 1113 are important to DBO and will help that department enforce the Check Sellers, Bill Payers, and Proraters Law, the impact of the bill will be felt by very few licensees. According to DBO, there are only six active licensees under that law. 4. Summary of Arguments in Support: None received. 5. Summary of Arguments in Opposition: None received. AB 1113 (Chau) Page 4 of ? LIST OF REGISTERED SUPPORT/OPPOSITION Support None received Opposition None received -- END --