BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
                         BANKING AND FINANCIAL INSTITUTIONS
                             Senator Marty Block, Chair
                                2015 - 2016  Regular 

          Bill No:             AB 1113        Hearing Date:    June 17,  
          2015
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          |Author:    |Chau                                                 |
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          |Version:   |February 27, 2015    Introduced                      |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Eileen Newhall                                       |
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               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              Check Sellers, Bill Payers, and Proraters Law is rescinded,  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  







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              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  








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              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.

           














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          LIST OF REGISTERED SUPPORT/OPPOSITION
            
          Support
           
          None received

           Opposition
               
          None received


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