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Financial Services — FAQ's

  1. GENERAL QUESTIONS
  2. QUESTIONS REGARDING CALIFORNIA FINANCE LENDERS
  3. QUESTIONS REGARDING MORTGAGE BANKERS
  4. QUESTIONS REGARDING ESCROW AGENTS Updated
  5. QUESTIONS REGARDING CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW
A. GENERAL QUESTIONS
  1. HOW DO I OBTAIN A CERTIFICATE OF SEARCH FROM THE DEPARTMENT OF CORPORATIONS OF THE DEPARTMENT'S RECORDS RELATING TO A FINANCE COMPANY IN THE CASE WHERE (1) THE DEPARTMENT OF MOTOR VEHICLES' RECORDS INDICATE THAT THERE IS A LIEN ON MY MOTOR VEHICLE AND (2) A TRANSFER OF TITLE OF THE MOTOR VEHICLE CANNOT BE COMPLETED WITHOUT A LIEN RELEASE TO CLEAR THE TITLE?

    The Department of Corporations will conduct a Certificate of Search if your lien-holder is a finance company licensed by this department. If your lien-holder is a bank, savings & loan, or credit union please call the California Department of Financial Institutions at (916) 322-5966 or (800) 622-0620. If your lien-holder is a federal credit union call the National Credit Union Association at (703) 518-6300. For companies located outside of California, you need to contact the Consumer Affairs Department of the state where your lien-holder is located.

    In order to obtain a Certificate of Search regarding a finance company located in California, send a written request, along with a stamped, self-addressed envelope and a check or money order in the amount of $2.00 made payable to the Department of Corporations, to the following address:

    Department of Corporations
    Attention: Cashier
    320 W. 4th Street, Suite 750
    Los Angeles, CA 90013

    The written request must state that it is a request for a Certificate of Search and include the complete name of the finance company for which the search is being requested. The search will be performed for the name provided in the request. Department records contain only the name of the licensee as it appears on the license. An abbreviation of a name will not be able to be searched.

    Also, any additional information, if available, should be furnished to the Department as part of the written request, such as the Department's license number for the finance company, the address of the finance company, and the date of the loan and when the finance company made the loan.

    A Certificate of Search will indicate either that (1) the lien holder (i.e., the finance company) is currently licensed or is no longer licensed or (2) there is no record of the company being licensed by the Department of Corporations.

    The Certificate of Search can then be submitted to the Department of Motor Vehicles.

  2. WHICH LAWS IS THE FINANCIAL SERVICES DIVISION RESPONSIBLE FOR ADMINISTERING?
    • California Finance Lenders Law
    • California Residential Mortgage Lending Act
    • Check Sellers, Bill Payers and Proraters Law
    • Escrow Law
  3. WHERE CAN I OBTAIN COPIES OF THE VARIOUS LAWS AND REGULATIONS ADMINISTERED BY THE DEPARTMENT OF CORPORATIONS?

    Copies of the laws and regulations administered by the Department of Corporations are available from West Group

    • For copies of the regulations call: (800) 888-3600 or (415) 224-6611
    • For copies of the laws call: (800) 762-5272

    The California Code of Regulations is also available at the Office of Administrative Law website and the Financial Code is available at the Legislative Counsel of California's website.

  4. HOW CAN I FIND OUT IF A COMPANY IS INCORPORATED IN CALIFORNIA?

    Call the Secretary of State at (916) 653-7315 or visit the California Secretary of State's website.

  5. HOW DO I OBTAIN AN APPLICATION FOR A LICENSE UNDER ONE OF THE LAWS ADMINISTERED BY THE FINANCIAL SERVICES DIVISION?

    You may call 1-866-ASK-CORP (1-866-275-2677) and ask for an application packet for any of the laws listed above. You may also be referred to licensing staff through this number if you have a particular question you need answered. Applications may also be received by sending your request to:

    Department of Corporations
    Financial Services Division
    320 West 4th Street, Suite 750
    Los Angeles, CA 90013-1105

  6. HOW MAY I OBTAIN A LISTING OF LICENSEES REGULATED BY THE DEPARTMENT'S FINANCIAL SERVICES DIVISION?

    Lists can be obtained for each industry licensed by the Department's Financial Services Division in either paper or electronic form. A check or money order to cover the cost of each list should be sent to:

    Department of Corporations
    Attention: Cashier
    320 West 4th Street, Suite 750
    Los Angeles, CA 90013-1105

    The following lists are available for purchase. The cost of an electronic copy on a disk for each of the following is $20.00, the cost for a paper list is stated below.

    • ESCROW LICENSEES - $17.00
    • CHECK SELLERS, BILL PAYERS AND PRORATERS - $5.00
    • CALIFORNIA FINANCE LENDERS - $87.00
    • MORTGAGE BANKERS - $77.00
    • CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW - $43.00

    You can also determine if a company is licensed by checking the Financial Services Division licensee listing on the website.

  7. HOW CAN A COMPLAINT BE FILED AGAINST A MORTGAGE BANKER, FINANCE COMPANY, ESCROW COMPANY, OR CHECK SELLER?

    You may only file a complaint against one of the above companies if they are licensed by the Department of Corporations. In order to determine if a company is licensed by the Department of Corporations you may call us or use the Financial Serviced Division Webpage address listing at http://www.corp.ca.gov/.

    The Department of Corporations' toll free telephone number for determining license status or filing complaints is (866) ASK-CORP ((866) 275-2677). You may call this number to discuss your problem and determine if your concern is an issue the Department may assist you with. Once it is determined that your complaint falls within our jurisdiction, a complaint form will be sent to you. You may also download a complaint form from the Department of Corporation Webpage at http://www.corp.ca.gov/about/complaint.asp. When we receive a completed form we contact the company and request the information and documents needed to complete an independent review of the complaint. The Department also requires the licensee involved to investigate and respond to both you and the Department regarding the concerns raised by in the complaint.

    Please keep in mind that as an administrative agency, the Department's authority is limited. We cannot litigate on your behalf, or act as your attorney. If the circumstances of your complaint require legal action, you may wish to consult an attorney. If the matter already involves litigation, the Department will generally not issue a letter of findings to you. However, the complaint will be reviewed on a confidential basis and any appropriate action will be taken.

  8. ARE COMPLAINTS FILED WITH THE DEPARTMENT PUBLIC INFORMATION?

    No. When a complaint is filed, we contact the company to obtain the information and copies of documents necessary to process the complaint. After the information is reviewed, the complainant receives a letter of findings. This letter, along with any documents received while processing the complaint, are kept in our confidential files. If a complaint results in an administrative action being taken, the result of that action (administrative order) will be available in our public files.

B. CALIFORNIA FINANCE LENDER
  1. WHAT IS A CALIFORNIA FINANCE LENDER?

    The definition of "finance lender" includes any person engaged in the business of making consumer loans or making commercial loans.

  2. WHO IS REQUIRED TO OBTAIN A CALIFORNIA FINANCE LENDERS LICENSE?

    In general, any person engaging in the business of a finance lender or broker. It should be noted that the California Finance Lenders Law contains a number of exemptions for persons licensed by other regulatory agencies.

  3. WHAT KIND OF LOANS CAN A CALIFORNIA FINANCE LENDER MAKE?

    Loans made by a finance lender may be unsecured or secured. If the loan is secured, it may be secured by personal property, or if the bona fide principal amount of the loan is greater than $5,000, it may be secured solely by real property or a combination of real and personal property.

  4. WHAT IS A BROKER UNDER THE CALIFORNIA FINANCE LENDERS LAW?

    The definition of "broker" includes any person engaged in the business of negotiating or performing any act as broker in connection with loans made by a finance lender. A broker licensed under the California Finance Lenders Law may only broker loans to lenders licensed as finance lenders. The license does not provide the broker with the authority to broker loans to and collect brokerage commissions from other types of lenders such as credit unions and banks.

  5. WHAT ARE THE REQUIREMENTS FOR A CALIFORNIA FINANCE LENDERS LICENSE? <

    In general, an applicant/licensee must:

    1. Have and maintain a $25,000 net worth.
    2. Obtain and maintain a $25,000 surety bond.
    3. Have a history absent any criminal history or history of sanctions by any regulatory agency resulting from dishonesty, fraud or deceit.
    4. Have a plan of business consistent with the business of finance lender.
  6. WHERE ARE THE LAW AND REGULATIONS FOR CALIFORNIA FINANCE LENDERS?

    The Finance Lenders Law is contained in Division 9 (commencing with Section 22000) of the California Financial Code and the regulations are contained in Chapter 3, Title 10, California Code of Regulations, commencing with Section 1404.

  7. CAN A CALIFORNIA FINANCE LENDER REPOSSESS A VEHICLE AFTER ONE MISSED PAYMENT?

    The Finance Lenders Law does not prohibit a lender from repossessing a vehicle after a single missed payment. To determine whether the repossession of a vehicle is permissible under your loan, refer to the original loan/contract documents that you signed when the financing was obtained. In most cases, lenders are within their rights to repossess a vehicle when a payment is not made.

C. MORTGAGE BANKER
  1. WHO CAN GET A CALIFORNIA RESIDENTIAL MORTGAGE LENDERS ACT (CRMLA) LICENSE?

    In general, any form of organization may get a license. This includes natural persons, sole proprietorships, corporations, partnerships, limited liability companies, associations, trusts, joint ventures, unincorporated organizations, joint stock companies, governments or political subdivisions of governments and any other entity.

  2. WHAT ARE THE LICENSING REQUIREMENTS FOR A LICENSE UNDER THE CRMLA?

    The applicant must be an approved lender and/or servicer with VA, FHA, FmHA, Ginnie Mae, Fannie Mae or Freddie Mac. The applicant must have a tangible net worth of at least $250,000 at the time of application and must maintain this tangible net worth at all times. Tangible net worth should be computed in accordance with generally accepted accounting principles and must be supported by an audited financial statement. Each licensee must provide audited financial statements each year.

    In addition, the applicant must provide and a licensee must maintain a surety bond of $50,000. The bond shall be used for the recovery of expenses, fines, and fees levied by the commissioner or for losses or damages incurred by borrowers or consumers as a result of a licensee's noncompliance with the requirements of the CRMLA.

  3. DO I HAVE TO TAKE AN EXAMINATION OR MEET EDUCATIONAL REQUIREMENTS FOR A CRMLA LICENSE?

    There is no testing or examination required. The only educational requirements are for employees who will be conducting brokerage services under the California Residential Mortgage Lenders Act license. Prior to providing brokerage services and thereafter once every four years, those employees providing brokerage services must complete a three-hour course in ethics, professional conduct and legal aspects of real estate, and a three-hour course in agency relationships and duties in a real estate brokerage practice.

  4. DOES THE DEPARTMENT OF CORPORATIONS MAINTAIN A LIST OF APPROVED CONTINUING EDUCATION PROVIDERS FOR FULFILLMENT OF THE 6 HOUR CONTINUING EDUCATION REQUIREMENT WHEN A LICENSED LENDER PLANS TO ALSO PROVIDE BROKERAGE SERVICES?

    No. The Department does not approve the Agency and Ethics courses required of employees engaged in brokering activities. CRMLA licensees are required to take Agency and Ethics courses equivalent to those required of Real Estate licensees. The Department of Real Estate has approved continuing education courses for their licensees. CRMLA licensees who wish to provide brokerage service may wish to refer to that list DRE's website at http://secure.dre.ca.gov/publicasp/cecontinue.asp

  5. HOW MUCH DOES IT COST TO OBTAIN A CRMLA LICENSE?

    There is an application fee of $900, an investigation fee of $100 and fingerprint processing costs of $62 per person investigated.

    On or before September 30 of each year, the Department will levy an annual assessment to be paid by each licensee for its pro rata share of all costs and expenses reasonably incurred in the administration of the CRMLA. The pro rata share is the proportion which a licensee's lending and servicing activity as reported on the annual report bears to the aggregate activity of all licensees. The minimum amount provided by statute is $1,000 with a maximum of $5,000. The licensee must also pay the cost of its own regulatory examination.

  6. MUST I MAINTAIN AN OFFICE OR RECORDS WITHIN THE STATE OF CALIFORNIA?

    No. Licensees are not required to maintain any offices within the State of California. If the business locations are out of state, the Department will either require that records be made available for examination in California within 10 calendar days of request or the licensee must pay all costs of the Department's regulatory examination of the company, including travel expenses.

  7. WHERE ARE THE LAW AND REGULATIONS FOR THE CALIFORNIA RESIDENTIAL MORTGAGE LENDING ACT?

    The California Residential Mortgage Lending Act is contained in Division 20 (commencing with Section 50000) of the California Financial Code, and the regulations are contained in Subchapter 11.5 of Chapter 3, Title 10, California Code of Regulations.

D. ESCROW LAW
  1. WHAT IS THE PURPOSE OF THE CALIFORNIA ESCROW LAW?

    The purpose of the Escrow Law is to protect members of the public who entrust an escrow agent with their funds. Escrow agents, joint control agents and Internet escrow agents are subject to the Escrow Law.

  2. WHERE ARE THE LAW AND REGULATIONS FOR THE ESCROW LAW LOCATED?

    The Escrow Law is contained in Division 6 (commencing with Section 17000) of the California Financial Code and the regulations are contained in Subchapter 9 of Chapter 3, Title 10, California Code of Regulations.

  3. WHAT IS AN ESCROW AGENT?

    "Escrow agent" means any person engaged in the business of receiving escrows for deposit or delivery.

  4. IS AN ESCROW AGENT THAT PROCESSES ESCROW TRANSACTIONS OVER THE INTERNET REQUIRED TO BE LICENSED BY THE DEPARTMENT OF CORPORATIONS?

    Yes. The Escrow Law defines an Internet escrow agent as any person engaged in the business of receiving escrows for deposit or delivery over the Internet.

  5. WHAT IS THE DEFINITION OF AN ESCROW?

    "Escrow," as defined in Section 17003 of the California Financial Code, means any transaction wherein one person, for the purpose of effecting the sale, transfer, encumbering, or leasing of real property to another person, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition, when it is then to be delivered by such third person to a grantee, grantor, promisee, promisor, obligee, obligor, bailee, bailor, or any agent or employee of any of the latter.

  6. WHAT IS A JOINT CONTROL AGENT?

    "Joint control agent" means any person engaging in the business of receiving money or other property for disbursal or use in payment of the cost of labor, material, services, permits, fees, or other items of expense incurred in the construction of improvements upon real property.

  7. WHO LICENSES AND REGULATES THE ESCROW AGENTS, JOINT CONTROL AGENTS AND INTERNET ESCROW AGENTS IN CALIFORNIA?

    The Department of Corporations licenses and regulates escrow agents, joint control agents and Internet escrow agents in California.

  8. ARE ESCROW AGENTS, INTERNET ESCROW AGENTS OR JOINT CONTROL AGENTS THAT ARE LOCATED IN OTHER STATES THAT OFFER OR PROVIDE ESCROW SERVICES IN CALIFORNIA REQUIRED TO BE LICENSED BY THE DEPARTMENT OF CORPORATIONS?

    Yes. The Escrow Law requires that any person engaged in the escrow business as an escrow agent, Internet escrow agent or joint control agent within California may do so only as a corporation organized for that purpose licensed by the Commissioner as an escrow agent or joint control agent. "Within California" is defined in Section 17005.5 of the California Financial Code as follows:

    "Within this state" means any activity of a person relating to receiving escrows for deposit or delivery that originates from this state and is directed to persons outside this state, or that originate from outside this state and is directed to persons inside this state, or that originates inside this state and is directed to persons inside this state, or that leads to the formation of a contract and the offer or acceptance thereof is directed to a person in this state, whether from inside or outside this state and whether the offer was made inside or outside this state.

  9. HAS THE DEPARTMENT OF CORPORATIONS TAKEN ANY ACTION AGAINST UNLICENSED INTERNET ESCROW AGENTS THAT ARE OFFERING AND/OR PROVIDING ESCROW SERVICES OVER THE INTERNET TO CALIFORNIA RESIDENTS THAT ARE LOCATED OUTSIDE OF CALIFORNIA?

    Yes. Please refer to the Department of Corporations Press Release 00-13 on the results of a sweep of online escrow companies offering their services over the Internet.

  10. WHAT IS REQUIRED TO OBTAIN A LICENSE FROM THE DEPARTMENT OF CORPORATIONS UNDER THE ESCROW LAW?

    Escrow agents, Internet escrow agents and joint control agents licensed pursuant to the Escrow Law are required to be corporations whose main purpose is to provide escrow services. The articles of incorporation must include a clause that states the primary purpose of the corporation is "to engage" in business as an escrow agent. The securities of the escrow applicant must also be qualified for issuance pursuant to the Corporate Securities Law or be exempt therefrom. The securities issued by a corporation licensed as an escrow agent must be placed in escrow, and the Commissioner of Corporations must approve any transfer or issuance of stock of the escrow company.

    REQUIREMENTS FOR OBTAINING A LICENSE.

    1. Fees for filing an application are $625 for the first office or location and $425 for each additional office or location along with an investigation fee of $100 for each location. The fees are non-refundable.
    2. Membership in Escrow Agents' Fidelity Corporation (EAFC) if the escrow agent will be engaging in the following types of escrows as specified in Subdivision (c) of Section 17312 of the California Financial Code:
      1. Real property escrows, including, but not limited to, the sale, lease, exchange, or transfer of title, and loans or other obligations to be secured by a lien upon real property.
      2. Bulk sale escrows, including, but not limited to, the sale or transfer of title to a business entity and the transfer of liquor licenses or other types of business licenses or permits.
      3. Fund or joint control escrows, including, but not limited to, transactions specified in 17005.1 of the California Financial Code and contracts specified in Section 10263 of the Public Contract Code.
      4. The sale, transfer of title, or refinance escrows for manufactured homes or mobile homes.
      5. Reservation deposits required under Article 2 (commencing with Section 11010) of Chapter 1 of Part 2 of Division 4 of the Business and Professions Code or by regulation of the Department of Real Estate to be held in an escrow account.
      6. Escrows for sale, transfer, modification, assignment, or hypothecation of promissory notes secured by deeds of trust.

      EAFC was organized for the purpose of indemnifying the members against losses sustained as a result of fraud, theft or embezzlement by officers, directors, stockholders and employees of the escrow agent (Chapter 2.5 of Division 6 of the California Financial Code). Each applicant is required to pay EAFC a membership fee of $3,000 and comply with the certificate requirements. EAFC may be contacted at:

      Escrow Agents' Fidelity Corporation
      21731 Ventura Blvd., Suite 110
      Woodland Hills, CA 91364
      Telephone - (818) 593-7080

    3. Each applicant must file with the Department a fidelity bond if the transactions processed are of the type not listed in Subdivision (c) of Section 17312 of the California Financial Code (see A-F in item 2 above). The fidelity bond must provide fidelity coverage on each officer, director, trustee and employee of not less than $125,000 for the purpose of indemnifying the escrow agent (or the escrow agent's successor in interest) for loss of trust obligations held by the escrow agent as a result of fraudulent or dishonest abstraction, misappropriation, or embezzlement of trust obligations by an officer, director, trustee, or employee of the escrow agent.

      The fidelity bond may be either a primary commercial blanket bond or a blanket position bond which must be written by an insurer who has been licensed by the California Department of Insurance.

      The fidelity bond must contain a rider as set forth in Section 1723 of the California Code of Regulations which:

      1. Provides that the coverage of the bond extends to all officers, directors, trustees and employees of the insured whether or not such officers, directors trustees, and employees are compensated by the insured; and
      2. Provides that "employee" includes:
        1. The Commissioner of Corporations during the time the Commissioner, including his or her authorized representative, has possession of the property and business of the insured as provided in Chapter 6 (commencing with Section 17621) of Division 6 of the California Financial Code.
        2. Any individual or individuals assigned to perform employee duties for the insured within any premises of the insured by any agency furnishing temporary personnel on a contingent or part-time basis; provided however that the policy is not required to cover any loss caused by such individual if such loss is also covered by any insurance or suretyship held by the agency furnishing such temporary personnel to the insured.
        3. An independent contractor working in any office of the insured. Independent contractor means any natural person while performing escrow duties in the service of the insured, and whose performance in such service, the insured has a right to govern and direct, but whom the insured compensates by other than salary or wages.
      3. Contains a provision that the bond shall not be cancelled by the insurer in whole or in part without 30 days prior written notice to the Commissioner. The amount of the fidelity bond required will be increased depending on the monthly average escrow liability of the licensee.

        The fidelity bond may contain a deductible; however, the escrow agent must deposit with the Commissioner a surety bond satisfactory to the Commissioner in the amount of the deductible. The amount of the surety bond must always be maintained in the amount of the deductible of the fidelity bond. The surety bond must run to the state for the use of the state to cover any loss of trust obligations that the escrow agent's fidelity bond does not cover due to the fidelity bond's deductible.

    4. Financial requirements must be demonstrated through the submission of audited financial statements that indicate that the escrow agent has liquid assets in excess of current liabilities of $25,000 and tangible assets in excess of total liabilities of $50,000. If branch offices are maintained by the escrow agent, the escrow agent must increase tangible net worth by 50% of the requirement for the first branch office and 25% for each additional branch office. Any losses projected by the applicant during the first few months of operation as shown in the applicant's proposed budget must be taken into consideration when calculating the tangible net worth and liquid assets.
    5. Each escrow agent must file with the Commissioner a surety bond of at least $25,000. The bond is intended to be used to pay to the state or any person any amount that is due to the state or such person under the provisions of the Escrow Law. The amount of the bond required may increase up to a maximum of $50,000 depending on the escrow liability of the company. The bond must be increased by $5,000 for each additional licensed office.

      In lieu of the surety bond, a licensee may deposit with the Commissioner a cash bond in the amount required. The cash bond may be represented by cash deposited in a bank, an industrial loan company or a savings and loan association. Such cash deposits or certificates must be assigned to the Commissioner and may not be included in the assets of the licensee for purposes of the tangible net worth and liquid asset requirements.

    6. All stockholders, officers, directors, managers and employees must have background checks performed by the Department. These background checks include obtaining criminal history information through the Department of Justice and conducting civil court checks for activities that would indicate previous involvement in fraud, embezzlement, fraudulent conversion, or misappropriation of property. Each stockholder, officer, director, manager and employee will be required to file fingerprints cards which must be cleared through the Department of Justice. Applicants may use the Live Scan program to submit fingerprints electronically to the Department of Justice for clearance. The fee for each clearance is $10 plus the fee charged by the Department of Justice or the Live Scan operator.

      Each person named in the application will be required to file either a Statement of Identity and Questionnaire (FS512 SIQ) or Statement of Identity and Employment Application (EL 17419). These two forms, fingerprint cards and the request for live scan service may be obtained from the Department of Corporations upon request.

    7. A manager who possesses a minimum of five years of responsible escrow experience who will be stationed at the licensed location during open office hours. Responsible escrow experience has been interpreted to mean experience as an escrow officer on a full-time basis for five years.
    8. An affidavit that the applicant has read and is familiar with the Escrow Law and regulations must be signed.
    9. Applicants must file a branch office application to establish additional business office locations.
  11. WILL I BE NOTIFIED OF THE STATUS OF MY LICENSE APPLICATION AFTER IT IS FILED?

    Yes. The applicant will be notified within 45 days that an application has been accepted or of any deficiencies that need to be corrected prior to further processing of the application. A license will be issued or denied within 30 days of a completed application. An application is considered complete when the clearance is received from the Department of Justice and all information and exhibits required by the application have been filed with the Department.

  12. WHAT ARE SOME OF THE REQUIREMENTS THAT ESCROW AGENTS, JOINT CONTROL AGENTS AND INTERNET ESCROW AGENTS MUST COMPLY WITH AFTER A LICENSE IS ISSUED BY THE DEPARTMENT OF CORPORATIONS?

    1. Reporting Requirements

      Each escrow agent must submit to the Commissioner an audit report containing audited financial statements covering the calendar year or fiscal year within 105 days after the close of the calendar or fiscal year. Additional relevant information is also required (California Financial Code Section 17406 and 1741.5 of the California Code of Regulations).

      Each escrow agent must file a Report of Escrow Liability for each licensed location no later than February 15 of each year (California Financial Code Section 17348).

      All new officers, directors and employees must be reported within ten days of their employment.

      Each escrow agent is required to notify the Department 30 days prior to a change in the address of the licensed location.

    2. Annual Assessment

      On or before the 30th day of May every year, the Department will assess each licensee the costs and expenses reasonably incurred in the administration of the Escrow Law. The amount of the assessment is $2,000 for each licensed location. If the assessment is not sufficient to cover the costs and expenses of administering the Escrow Law, the Commissioner is authorized to seek a special assessment not exceeding $500 per location.

    3. EAFC Assessments

      Each escrow agent that is required to be a member of EAFC will be subject to various assessments and must comply with the certificate program.

    4. Surety bond requirements

      Each escrow agent is required to maintain a surety bond at all times. The amount of the surety bond may be $25,000, $35,000 or $50,000 depending on the average trust liability. The surety bond amount is increased by $5,000 for each additional licensed location.

    5. Liquid and tangible net worth requirements

      Each escrow agent must maintain at all times liquid assets in excess of current liabilities of $25,000 and tangible assets in excess of total liabilities of $50,000. If branch offices are maintained by the escrow agent, they must increase tangible net worth by 50% of the requirement for the first branch office and 25% for each additional branch office.

    6. Books and records

      Each escrow agent is required to maintain its trust and general account books and records current at all times.

    7. Experience requirement

      An approved manager who has at least five years of qualifying experience must be at the licensed location at all times. An approved manager who has at least four years of qualifying experience must be at each licensed branch office at all times.

    8. Fidelity bond requirements

      Each escrow agent that is not required to be a member of EAFC or processes transactions that are not covered by EAFC must maintain a fidelity bond at all times.

    9. Regulatory Examination

      Each escrow agent is subject to a regulatory examination by the Department at least once every other calendar year, and the escrow agent is responsible for the cost of the regulatory examination.

  13. DOES THE CALIFORNIA ESCROW LAW PERMIT LICENSED ESCROW COMPANIES TO ELECTRONICALLY MAINTAIN AND (HEREINAFTER "PRESERVE") ITS RECORDS?

    Yes. Title 10, California Code of Regulations, Section (hereinafter "Section") 1737.3 allows an escrow company to preserve specified records in electronic format such as the following records in connection with the trust account or escrow account: bank statements, canceled checks, bank deposit slips, receipts for transferred funds, statement of account, escrow instructions, and any other records pertinent to the escrow transactions.

    Escrow companies should review Title 10, California Code of Regulations, Section 1737.3, in its entirety, to fully understand their records-retention responsibilities. Of course, escrow companies should also rely on advice of private legal counsel to help them comply with any other federal or state laws governing electronic records that are not administered by, and not within the scope of responsibility of, the Department of Corporations.

  14. HOW LONG MUST THE ESCROW COMPANY PRESERVE ITS ELECTRONIC RECORDS?

    As with records in printed form, the escrow company must preserve its electronic records for at least five years from the close of escrow. See Section 1737.3 (a). The "close of escrow" should be construed broadly to ensure adequate preservation of records including, but not limited to, an entry of a final disbursement of funds (e.g., the date of the final transaction in connection with an escrow). Of course, records preserved for at least five years from the date of the final transaction in connection with an escrow must also comply with all other requirements of the Escrow Law including Section 1737.3.

  15. WHAT ARE THE REQUIREMENTS FOR PRESERVING RECORDS IN AN ACCEPTABLE ELECTRONIC FORMAT?

    The records must be preserved and provided in a format that allows the Commissioner (including the Commissioner's representatives) complete access to all of the books, accounts, and records. The records must be preserved and provided in a software format that enables the Commissioner to determine if the escrow company is complying with the Escrow Law and regulations. The Commissioner must have the ability to download and print the records that are preserved and provided electronically. See Section 1737.3(b).

  16. IS AN ESCROW COMPANY REQUIRED TO PRESERVE AND PROVIDE RECORDS IN PAPER FORM IF THEY ARE NOT PRESERVED IN ELECTRONIC FORM?

    Yes. If the records are not preserved and provided in an electronically acceptable format, in accordance with the Escrow law and regulations, then records must be preserved and provided in paper form. See Section 1737.3(b).

  17. MUST AN ESCROW COMPANY USE A PARTICULAR STORAGE MEDIA FOR ELECTRONIC RECORDS?

    Yes. The electronic records must be preserved in a media that is non-erasable "write once, read many" ("WORM") that does not allow changes to the stored document. The media must also be consistent with the minimum standards of quality approved by either the National Institute of Standards and Technology or the Association for Information and Image Management. Finally, the media must contain written authentication identifying the electronic record as an exact unaltered copy of the document. See Section 1737.3(b).

  18. DOES THE ESCROW LAW PROHIBIT AN ESCROW COMPANY FROM DESTROYING ITS PAPER RECORDS IF THE SAME RECORDS ARE ALSO ELECTRONICALLY PRESERVED IN ACCORDANCE WITH THE REQUIREMENTS OF THE ESCROW LAW INCLUDING, BUT NOT LIMITED TO, THE MINIMUM FIVE-YEAR RETENTION PERIOD OF SECTION 1737.3?

    No. The Escrow Law does not prohibit destruction of paper records if they are electronically preserved as required by the Escrow Law including, but not limited, to Section 1737.3. Of course, escrow companies should rely on advice of private legal counsel to help them comply with any other federal or state laws governing destruction of records that are not administered by, and not within the scope of responsibility of, the Department of Corporations.

  19. DOES ANYONE PROVIDE ESCROW CLASSES OR TRAINING FOR ESCROW PERSONNEL IN CALIFORNIA?

    Yes. California Escrow Association through the regional associations offers various types of training and educational seminars for escrow personnel at all levels.

    For additional information, contact California Escrow Association at:

    California Escrow Association
    2520 Venture Oaks Way, Suite 150
    Sacramento, CA 95833
    Tel: (916) 239-4075
    Fax: (916) 924-7323

  20. WHAT ACTION CAN THE DEPARTMENT TAKE AGAINST ESCROW AGENTS THAT FAIL TO COMPLY WITH THE ESCROW LAW AND REGULATIONS?

    The activities of an escrow agent are highly regulated for the protection of members of the public who entrust their funds to these companies. The escrow agent's operations are subject to the provisions of the California Financial Code and the California Code of Regulations. Failure to comply with these laws and rules can result in administrative action being taken that can range from a cease and desist order to the Department taking possession of the company. The Department may assess penalties for late filing of reports. The Department can bar an individual from any position of employment or other association with a licensed escrow agent, subject to appropriate administrative procedures. The Department can also pursue criminal and civil sanctions where it is appropriate. The owners of a company are responsible for the actions of the managers and employees.

  21. HOW DO I DETERMINE IF AN ESCROW AGENT IS LICENSED BY THE DEPARTMENT OF CORPORATIONS?

    Visit the License Listing section of the Department's website to check if an escrow company is licensed by the Department of Corporations.

  22. IS THERE ANYONE THAT ENGAGES IN THE BUSINESS OF AN ESCROW AGENT IN CALIFORNIA WHO IS EXEMPT FROM THE DEPARTMENT OF CORPORATIONS' LICENSING REQUIREMENTS?

    Yes. The exemptions under the Escrow Law are as follows:

    1. Any person doing business under any law of this state or the United States relating to banks, trust companies, building and loan or savings and loan associations, or insurance companies.
    2. Any person licensed to practice law in California who has a bona fide client attorney relationship with a principal in a real estate or personal property transaction and who is not actively engaged in the business of an escrow agent.
    3. Any person whose principal business is that of preparing abstracts or making searches of title that are used as a basis for the issuance of a policy of title insurance by a company doing business under any law of this state relating to insurance companies.
    4. Any real estate broker licensed by the Real Estate Commissioner while performing acts in the course of or incidental to a real estate transaction in which the broker is an agent or a party to the transaction and in which the broker is performing an act for which a real estate license is required.

    The exemptions provided for in paragraphs 2 and 4 are personal to the persons listed, and those persons may not delegate any duties other than duties performed under the direct supervision of those persons. The exemptions provided for in paragraphs 2 and 4 are not available for any arrangement entered into for the purpose of performing escrow for more than one business.

    The Escrow Law provides that the burden of proving an exemption is upon the person claiming it.

  23. WHO DO I CONTACT IF AN ESCROW COMPANY THAT WAS NOT LICENSED BY THE DEPARTMENT OF CORPORATIONS PROCESSED MY ESCROW?

    If your escrow was processed by a:

    Real Estate Broker contact:

    Department of Real Estate
    320 West 4th Street, Suite 350
    Los Angeles, CA 90013
    (213) 896-3399

    Title Insurance Company contact:

    Department of Insurance
    300 South Spring Street
    Los Angeles, CA 90013
    (800) 927-4357

    Federally Chartered Bank contact:

    Comptroller of the Currency
    Regional Administrator
    50 Fremont Street, #3900
    San Francisco, CA 94105

    State Chartered Savings and Loan Association or Savings Bank contact:

    Department of Financial Institutions
    111 Pine Street, Suite 1100
    San Francisco, CA 94105
    (415) 263-8500

    Federally Chartered Savings and Loan Association or Savings Bank contact:

    Office of Thrift Supervision
    P. O. Box 7165
    San Francisco, CA 94111
    (650)746-7000

  24. WHAT DO I DO IF MY ESCROW COMPANY IS NOT LICENSED BY THE DEPARTMENT OF CORPORATIONS AND IS NOT REGULATED BY ONE OF THE GOVERNMENTAL AGENCIES LISTED ABOVE?

    Contact the Department of Corporations. The company may be engaging in unlicensed escrow activity.

  25. ARE THE INDEPENDENT ESCROW AGENTS LICENSED BY THE DEPARTMENT OF CORPORATIONS REQUIRED TO BE BONDED OR INSURED TO PROTECT AGAINST LOSS OF ESCROW TRUST FUNDS?

    Yes. Those escrow agents licensed by the Department of Corporations that process the following types of escrows are required to be members of Escrow Agents' Fidelity Corporation (EAFC).

    1. Real property escrows, including, but not limited to, the sale, lease, exchange, or transfer of title, and loans or other obligations to be secured by a lien upon real property.
    2. Bulk sale escrows, including, but not limited to, the sale or transfer of title to a business entity and the transfer of liquor licenses or other types of business licenses or permits.
    3. C. Fund or joint control escrows, including, but not limited to, transactions specified in Section 17005.1 of the California Financial Code and contracts specified in Section 10263 of the Public Contract Code.
    4. The sale, transfer of title, or refinance escrows for manufactured homes or mobile homes.
    5. Reservation deposits required under Article 2 (commencing with Section 11010) of Chapter 1 or Part 2 of Division 4 of the Business and Professions Code or by regulation of the Department of Real Estate to be held in an escrow account.
    6. Escrows for sale, transfer, modification, assignment, or hypothecation of promissory notes secured by deeds of trust.

    EAFC was organized for the purpose of indemnifying escrow agents against losses sustained as a result of fraud, theft or embezzlement by officers, directors, stockholders and employees of the escrow agent (Chapter 2.5 of Division 6 of the California Financial Code). EAFC is not an agency or instrumentality of, and there is no guarantee of payment of any claim by, the State of California.

    Each escrow agent is required to file a fidelity bond with the Department if the transactions processed are of the type not listed in subdivision (c) of Section 17312 of the California Financial Code (see A-F above). The fidelity bond must provide fidelity coverage on each officer, director, trustee and employee of not less than $125,000 for the purpose of indemnifying the escrow agent (or the escrow agent's successor in interest) for loss of trust obligations held by the escrow agent as a result of fraudulent or dishonest abstraction, misappropriation, or embezzlement of trust obligations by an officer, director, trustee, or employee of the escrow agent.

    In addition, each escrow agent is required to file a surety bond in the amount of $25,000, $35,000 or $50,000, depending on the size of the company. An additional $5,000 is required for each additional location.

  26. ARE THE FEES ESCROW AGENTS CHARGE FOR THEIR SERVICES REGULATED?

    The Escrow Law does not restrict the fees that escrow agents may charge for services. The amounts escrow agents charge for their services vary depending on the location of the escrow agent, type of transaction and the competition in the area. The escrow agent is required to disclose all fees on the closing statement that is prepared after the transaction is completed. It is recommended that you request that the escrow agent provide you with a fee schedule that shows the charges for their services.

E. CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW
  1. CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW

    A deferred deposit transaction is a transaction whereby a person defers depositing a customer's personal check until a specific date, pursuant to a written agreement, as provided by California Financial Code Sections 23035. Personal check includes the electronic equivalent of a personal check.

  2. WHAT STATE AGENCY IS RESPONSIBLE FOR THE REGULATION OF DEFERRED DEPOSIT TRANSACTIONS?

    On December 31, 2004, regulatory responsibility for Deferred Deposit Originators transferred from the Department of Justice to the Department of Corporations ("Department") when the California Deferred Deposit Transaction Law (Financial Code Section 23000 et. seq.) became operative.

  3. WHO ARE DEFERRED DEPOSIT ORIGINATORS?

    Any person who offers, originates, or makes a deferred deposit transaction.

    Please note that "person" means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government entity, or a political subdivision of a government entity.

  4. WHO IS REQUIRED TO OBTAIN A LICENSE TO ENGAGE IN THE BUSINESS OF DEFERRED DEPOSIT TRANSACTIONS?

    Any person that offers, originates or makes a deferred deposit transaction, arranges a deferred deposit for a deferred deposit originator, acts as an agent for a deferred deposit originator, or assists a deferred deposit originator in the origination of a deferred deposit is required to obtain a license from the Department of Corporations

  5. I AM PLANNING TO ENGAGE IN THE BUSINESS OF A DEFERRED DEPOSIT ORIGINATOR. I CURRENTLY DO NOT HAVE ANY LICENSE OR PERMIT. WHERE DO I OBTAIN THE PERMITS OR LICENSES TO ENGAGE IN THIS BUSINESS?

    If you wish to engage in the business of deferred deposit transactions you will need to have a license from the Department of Corporations. Refer to Question Number 8.

  6. I AM LOCATED IN CALIFORNIA PLANNING TO ENGAGE IN THE BUSINESS OF MAKING DEFERRED DEPOSIT TRANSACTIONS OVER THE INTERNET ONLY TO RESIDENTS IN OTHER STATES. AM I REQUIRED TO OBTAIN A LICENSE FROM THE DEPARTMENT.OF CORPORATIONS UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW?

    Yes.

  7. I AM NOT LOCATED IN CALIFORNIA PLANNING TO ENGAGE IN THE BUSINESS OF MAKING DEFERRED DEPOSIT TRANSACTIONS OVER THE INTERNET TO RESIDENTS IN CALIFORNIA AND TO RESIDENTS IN OTHER STATES. AM I REQUIRED TO OBTAIN A LICENSE FROM THE DEPARTMENT OF CORPORATIONS UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW.

    Yes.

  8. WHAT ARE THE REQUIREMENTS TO OBTAIN A LICENSE TO ENGAGE IN THE BUSINESS OF DEFERRED DEPOSIT FROM THE DEPARTMENT OF CORPORATIONS?
    1. For each location, submit an application with the appropriate exhibits, an application fee of $200 and an investigation fee of $100 and the assessment payment (if applicable). All fees and the assessment are non-refundable.
    2. File a surety bond in the amount of $25,000 with the application.
    3. Submit financial statements prepared in accordance with Generally Accepted Accounting Principles that demonstrates that the applicant has a net worth of at least $25,000. After licensure, the licensee shall be required to maintain a net worth of at least $25,000 at all times.
    4. The application must include fingerprint information submitted by live scan and the cost of fingerprint processing for the following:
      • The applicant;
      • The general partners, officers, directors and persons owning or controlling, directly or indirectly, 10% or more of the outstanding equity interests of the applicant; and
      • Other key persons involved, such as managers/members, trustees, any other officers with direct responsibility for the conduct of applicant's deferred deposit activity, and the persons who will be in charge of the place of business.
  9. WHERE DO I OBTAIN FINGERPRINT LIVE SCAN FORMS?

    The fingerprint live scan forms are available through the Department's website at Request for Live Scan Service - Applicant Submission.

  10. IS A MOBILE UNIT THAT CONDUCTS DEFERRED DEPOSIT TRANSACTIONS CONSIDERED A SEPARATE LOCATION?

    Yes. Each mobile unit conducting deferred deposit transactions must submit an application with the appropriate fees.

  11. WHEN CAN THE CDDTL SHORT FORM APPLICATION FOR LICENSURE BE FILED?

    A person applying for a license must first file the Department of Corporations' "Application for A License Under the California Deferred Deposit Transaction Law." Thereafter, the short form license application may be filed by the same person seeking a license for additional locations.

  12. WHERE DO I OBTAIN AN APPLICATION FOR A LICENSE UNDER THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW?

    The application forms are available through the Department's website or at any of the Department's office locations or calling 1-866-ASK CORP (1-866-275-2677):

    320 W. 4th Street, Suite 750 Los Angeles, CA 90013
    71 Stevenson Street, Suite 2100 San Francisco, CA 95105

    1515 K Street, Suite 200 Sacramento, CA 95814
    1350 Front Street, Room 2034 San Diego, CA 92101

  13. WHERE DO I SEND THE COMPLETED LICENSE APPLICATION, INCLUDING FEES?

    All application information should be submitted to the Department's Los Angeles Office:

    Department of Corporations
    320 West 4th Street, Suite 750
    Los Angeles, CA 90013-2344

  14. HOW OFTEN DO I NEED TO RENEW THE LICENSE ISSUED BY THE DEPARTMENT OF CORPORATIONS FOR A DEFERRED DEPOSIT ORIGINATOR?

    You do not need to renew the license issued to a Deferred Deposit Originator. The license shall remain in effect until surrendered, suspended or revoked.

  15. ARE THERE LIMITATIONS ON A DEFERRED DEPOSIT TRANSACTION?

    Yes. The face amount of the customer's personal check or the electronic equivalent of the customer's personal check may not exceed $300 and the fee charged may not be more than 15% of the face amount of the check.

  16. ARE THERE LIMITATIONS ON THE FEES THAT MAY BE CHARGED IN RELATION TO A DEFERRED DEPOSIT TRANSACTION?

    Yes. The fee may not exceed 15% of the face amount of the check. A single fee not to exceed $15 may be charged for a returned check. No additional fees may be added for late payments or returned checks.

  17. ARE THERE LIMITATIONS ON THE NUMBER OF DEFERRED DEPOIST TRANSACTIONS A LICENSEE MAY MAKE TO A CUSTOMER IN A 12-MONTH PERIOD?

    No. There are no limits on the number of deferred deposit transactions a licensee may make to a customer in a 12-month period. A licensee cannot make a new deferred deposit transaction during the period an earlier deferred deposit transaction is in effect for the same customer and the proceeds of a new deferred deposit transaction may not be used to pay off an existing deferred deposit transaction from the same licensee.

  18. IS A LICENSEE ALLOWED TO MAKE A DEFERRED DEPOSIT TRANSACTION TO A CUSTOMER WITH AN EARLIER DEFFERED DEPOSIT TRANSACTION THAT IS IN EFFECT IF THE TOTAL OF THE EXISTING DEFERRED DEPOSIT TRANSACTION AND THE NEW DEFERRED DEPOSIT TRANSACTION IS LESS THAN THE MAXIMUM ALLOWED OF $300?

    No. A licensee can not enter into a deferred deposit transaction with a customer during the period an earlier deferred deposit transaction is in effect for the same customer, including transactions where the existing deferred deposit transaction and the new deferred deposit transaction does not exceed the maximum amount allowed of $300.

  19. IS A LICENSEE ALLOWED TO MAKE A NEW DEFERRED DEPOSIT TRANSACTION TO A CUSTOMER THAT HAS AN EARLIER DEFERRED DEPOSIT TRANSACTION THAT IS IN EFFECT FROM ANOTHER LOCATION OF THE SAME LICENSEE?

    No. Licensees with multiple locations cannot enter into a deferred deposit transaction with a customer during the period an earlier deferred deposit transaction is in effect for the same customer at any of the licensee's locations.

  20. CAN A LICENSEE USE A CUSTOMER'S PERSONAL CHECK OR THE CUSTOMER'S ELECTRONIC EQUIVALENT OF A PERSONAL CHECK RECEIVED FROM A PREVIOUS DEFERRED DEPOSIT TRANSACTION FOR A NEW DEFERRED DEPOSIT TRANSACTION?

    No. A licensee is not permitted to accept or use a customer's personal check or a customer's electronic equivalent of a personal check received from a previous deferred deposit transaction for a new deferred deposit transaction.

  21. CAN A LICENSEE ACCEPT COLLATERAL IN CONJUNCTION WITH A DEFERRED DEPOSIT TRANSACTION?

    No.

  22. IS A LICENSEE ALLOWED TO MAKE THE DEFERRED DEPOSIT TRANSACTION CONTINGENT ON THE PURCHASE OF OTHER SERVICES OR PRODUCTS?

    No.

  23. ARE THERE ANY SPECIAL REQUIREMENTS FOR A LICENSEE THAT MAKES A DEFERRED DEPOSIT TRANSACTION TO A NON-ENGLISH SPEAKING PERSON?

    Yes. The written agreement must be written in the same language principally used in the oral discussions or negotiations leading to the execution of the deferred deposit agreement and must be in at least 10-point bold type.

  24. IS A LICENSEE ALLOWED TO EXTEND THE DUE DATE OF AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION OR ALLOW THE CUSTOMER TO MAKE PAYMENTS ON AN OUTSTANDING DEFERRED DEPOSIT TRANSACTION?

    Yes, though the licensee is not required to extend the due date or enter into an agreement to allow the customer to make payments on an outstanding deferred deposit transaction.

  25. WHAT ARE THE FEES A LICENSEE MAY CHARGE IN CONNECTION WITH EXTENSIONS AND PAYMENT PLANS GRANTED FOR REPAYMENT OF OUTSTANDING DEFERRED DEPOSIT TRANSACTIONS?

    A licensee may allow an extension of time to repay an outstanding deferred deposit transaction or a payment plan, but may not charge any additional fees or charges of any kind in conjunction with the extension or payment plan.

  26. IS A LICENSEE PERMITTED TO DEBIT A BORROWER'S BANK ACCOUNT ELECTRONICALLY USING ACH TRANSFERS ON MULTIPLE DAYS FOR VARYING AMOUNTS TO COLLECT A DELINQUENT ACCOUNT WITHOUT THE BORROWER'S AUTHORIZATION?

    No. The agreement or an addendum to the agreement must specify the days and amounts the licensee is authorized to debit the borrower's bank account electronically using ACH transfers to collect delinquent accounts. Any addendums to the agreement authorizing the licensee to debit the borrower's bank account electronically to collect overdue accounts must be in writing signed by the borrower, by fax with the borrower's signature or electronically authorized by the borrower over the Internet. The written agreement should cover the manner in which a customer's check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal chck by electronic means, the written agreement should specify that the licensee electronically deposits the customer's check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer's account, the written agreement should also specify the method and date of depositing the check under those circumstances. The written agreement should cover the manner in which a customer's check will be deposited and the specific date of deposit. For example, when the licensee elects to deposit a personal check by electronic means, the written agreement should specify that the licensee electronically deposits the customer's check and the specific date. If the licensee wishes to deposit the check either manually or electronically when there are insufficient funds in the customer's account, the written agreement should also specify the method and date of depositing the check under those circumstances.

  27. CAN A CUSTOMER BE CRIMINALLY PROSECUTED FOR FAILING TO REPAY A DEFERRED DEPOSIT TRANSACTION?

    No. A customer cannot be criminally prosecuted or threatened with criminal prosecution to collect a delinquent deferred deposit transaction.

  28. CAN A CUSTOMER BE REQUIRED TO PAY TREBLE DAMAGES IF THE CHECK DOES NOT CLEAR?

    No. A check that is being negotiated as part of a deferred deposit transaction is not subject to the provisions of Section 1719 of the Civil Code. No person shall be required to pay treble damages if the check does not clear.

  29. IS A CUSTOMER REQUIRED TO PAY COURT COSTS AND FILING FEES FOR A SMALL CLAIMS COURT ACTION TAKEN BY A LICENSEE TO COLLECT A DELINQUENT DEFERRED DEPOSIT TRANSACTION ACCOUNT?

    The Small Claims Court Judge hearing the case will determine if court costs and filing fees will be awarded to the licensee. The Deferred Deposit Transaction Agreement may not contain any provisions that require the customer to pay court costs or filing fees in conjunction with an action taken by the licensee to collect a delinquent account.

  30. WHO DO I CONTACT IF I FEEL A DEFERRED DEPOSIT ORIGINATOR IS ENGAGING IN IMPROPER OR ILLEGAL COLLECTION PRACTICES?

    Deferred Deposit Originators are subject to the California Fair Debt Collection Practices Act (California Civil Code, commencing with Section 1788). Refer to the California State Attorney General's website at http://ag.ca.gov/consumers/general/collection_agencies10.php for additional information regarding the Fair Debt Collections Act and instructions for filing complaints. You may also contact the Federal Trade Commission, which enforces the Federal Fair Debt Collections Practices Act, by mail at Consumer Response Center, Washington, DC 20580-0001 or telephone at 1(877)-FTC-Help.

  31. HOW DO I CHECK IF A DEFERRED DEPOSIT ORIGINATOR IS LICENSED BY THE DEPARTMENT OF CORPORATIONS?

    You may check on the Department of Corporations' website at www.corp.ca.gov, Financial Services Licensee Listing, or call the Department at 1-866-275-2677 (866-ASK-CORP).

  32. ARE THE LICENSEES SUBJECT TO EXAMINATION BY THE DEPARTMENT OF CORPORATIONS?

    Yes. The California Deferred Deposit Transaction Law provides that the Department may at any time, but not less than once every two years, investigate the business of deferred deposits, and examine the books, accounts, records and files of every licensee. The purpose of the regulatory examination is to determine compliance with the CDDTL and the rules and regulations established by the Commissioner. The licensee is required to allow the Department's representatives to have free access to the offices and places of business, along with books, accounts, records, files, safes and vaults. Each licensee is required to pay for the costs of the regulatory examination.

  33. HOW DO I SURRENDER MY LICENSE IF I AM PLANNING TO CEASE ENGAGING IN DEFERRED DEPOSIT TRANSACATION BUSINESS??

    A licensee may apply to surrender a license by delivering to the Commissioner written notice of the intent to surrender the license. The application to surrender the license must be signed by an authorized representative of the licensee and include the original license.

  34. DO I NEED TO NOTIFY THE DEPARTMENT OF CORPORATIONS IF I CHANGE THE ADDRESS OF A LICENSED LOCATION?

    Yes. A licensee is required to notify the Department at least ten days prior to the change of an address for a licensed location. The Department will approve the change in location by issuing an amended license with the new address.

  35. IS A LICENSEE REQUIRED TO NOTIFY THE DEPARTMENT OF CORPORATIONS IF THERE ARE CHANGES IN THE APPLICATION AFTER THE LICENSE IS ISSUED?

    Yes. The license issued under the CDDTL is not transferable or assignable. Generally, if there is a change in entity type, a new long form license application and new short form license applications for any additional locations would have to be filed for the new entity. A license issued to a partnership or limited partnership is not transferred or assigned by the death, withdrawal or admission of a partner, general partner or limited partner, unless the death, withdrawal, or admission dissolves the partnership to which the license was issued. If the change dissolves the partnership, a new long form license application and new short form license applications for any additional locations would have to be filed for the new partnership.

    A licensee is required to notify the Department of any change of its officers, directors or any persons named in the application within sixty days from the date of the change. The amendment to the original license application reflecting the change shall include the effective date of the change and the names of the persons involved in the change. The new persons are required, at a minimum, to submit Statement of Identity and Questionnaires and fingerprint information with the notification of the change.

  36. ARE LICENSEES ALLOWED TO STORE AND MAINTAIN THE BOOKS, RECORDS AND ACCOUNTS IN ELECTRONIC FORMAT?

    Yes. The books, records and accounts may be retained and provided to the Commissioner in electronic format provided that the electronic records are maintained and provided in a format that allows the Commissioner complete access to all of the books, accounts and records. The electronic records must be maintained in a media that ensures reliable, credible, accurate and auditable records. The electronic records must be provided to the Commissioner in a software format that is acceptable to the Commissioner and allows Commissioner to download and print any or all of the records that are stored and maintained electronically. The licensee shall provide any and all records maintained in electronic format in printed form if the electronic records are not in a format that enables the Commissioner to determine if the licensee is complying with the CDDTL or rules there under.

  37. WHERE CAN I OBTAIN INFORMATION REGARDING THE LAW AND REGULATIONS OF THE CALIFORNIA DEFERRED DEPOSIT TRANSACTION LAW?

    The California Deferred Deposit Transaction Law is contained in Division 10 of the California Financial Code. The California Deferred Deposit Transaction Law begins at Section 23000 et seq. Regulations are being developed at this time. The California Deferred Deposit Transaction Law may be obtained from the Official California Legislative Information website. The law can be found in the California Law section on this website. After they are developed the Regulations will be available from the Office of Administrative Law's website under CCR. There are also other websites available which may provide this information or it may be purchased from various vendors. Public libraries may also have copies of the law and regulations.

  38. WHO DO I CONTACT WITH QUESTIONS?

    Questions are to be directed to the Department at 1-866-275-2677 (866-ASK-CORP).