State Codes and Statutes

Statutes > California > Fin > 12300-12332

FINANCIAL CODE
SECTION 12300-12332



12300.  The commissioner may make general rules and regulations and
specific rulings, demands, and findings for the enforcement of this
division.


12300.1.  Licensees shall observe reasonable precautions against
theft or alteration of checks, drafts or money orders, and against
burglary or holdup.


12300.2.  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.




12300.3.  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.



12300.4.  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.


12300.5.  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.



12300.6.  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.


12301.  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.


12301.1.  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.



12301.2.  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.



12301.3.  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.


12301.4.  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.



12301.5.  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.



12302.  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.



12303.  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.



12304.  (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.



12305.  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.



12306.  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.



12307.  The commissioner may require the attendance of witnesses and
examine under oath all persons whose testimony he requires relative
to any examination or investigation.



12307.1.  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.



12307.2.  If the commissioner finds as a result of an examination or
report that a licensee is insolvent or conducting business in such
an unsafe or injurious manner as to render its further operations
hazardous to the public, he 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 his 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.


12307.3.  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.



12307.4.  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.



12307.5.  (a) For any licensee, a disciplinary action taken by the
State of California, another state, an agency of the federal
government, or another country for an action substantially related to
the activity regulated under this division may be grounds for
disciplinary action by the commissioner. A certified copy of the
record of the disciplinary action taken against the licensee by the
State of California, other state, agency of the federal government,
or other country shall be conclusive evidence of the events related
therein.
   (b) Nothing in this section shall preclude the commissioner from
applying a specific statutory provision in this division providing
for discipline against a licensee as a result of disciplinary action
taken against a licensee by the State of California, another state,
an agency of the federal government, or another country.



12309.  (a) A schedule of the fees charged by a licensee shall be
posted in a conspicuous place in the place of business of the
licensee and its agents. A licensee and its agents shall not charge
fees in excess of the posted fees.
   (b) Each licensee and its agents shall prominently post on the
premises of each office of the licensee and on the premises of each
agent, a notice clearly stating that checks or money orders issued by
the licensee or its agents are not insured by the federal
government, the state government, or any other public or private
entity. This notice shall be printed in English and in the same
language principally used by the licensee or any agent of the
licensee to advertise, solicit, or negotiate, either orally or in
writing, with respect to the purchase of checks or money orders. The
information required in this notice shall be clear, legible, and in
letters not less than one-half inch in height. The notice shall be
posted in a conspicuous location in the unobstructed view of the
public within the premises. In those locations operated by an agent
of the licensee, the agent, and not the licensee, shall be
responsible for the failure to properly post the required notice.




12310.  A licensee under this division shall not sell checks payable
to bearer, to cash, or to the purchaser, but a licensee may sell a
check in which the name of the payee is not designated in any way if
the check does not exceed one hundred fifty dollars ($150) in amount.



12311.  No licensee shall advertise, print, display, publish,
distribute, or broadcast, or cause or permit to be advertised,
printed, displayed, published, distributed, or broadcast, in any
manner whatsoever, any statement or representation which is false,
misleading, or deceptive, or which omits to state material
information, or which refers to the supervision of such licensee by
the State of California or any department or official thereof. The
commissioner may order any licensee to desist from any conduct which
he shall find to be a violation of the foregoing provisions.




12312.  An agreement between one licensed to engage in the business
of selling checks, drafts, money orders, or other commercial paper
serving the same purpose, and one undertaking to act in that business
as an agent of the licensee, shall be in writing.
   Such a licensee shall not pay such an agent any compensation as
consideration for becoming an agent, other than that specified in
their written agency agreement, in any manner, directly or
indirectly, or by any method, practice or device whatsoever.
   The commissioner may order any licensee to desist from any conduct
which the commissioner shall find to be a violation of the foregoing
provisions of this section.



12313.5.  Nothing in this chapter shall be construed as authorizing
the examination, inspection or auditing of the books and records of
any client of a business agent while such books and records are in
the possession of the business agent without the express consent of
the client.


12314.  The total charges received by a prorater, or any other
person for the prorater's services, may not exceed in the aggregate
twelve percent (12%) for the first three thousand dollars ($3,000),
eleven percent (11%) for the next two thousand dollars ($2,000), and
ten percent (10%) for any of the remaining payments distributed by a
prorater to the creditors of a debtor, except for payments made on
recurrent obligations. Recurring obligations shall be defined for the
purpose of this section as follows: current rent payments, current
utility payments, current telephone bills, current alimony payments,
current monthly insurance premium payments, and payments made on
obligations which are secured by a first mortgage or first deed of
trust on real property.
   (a) Notwithstanding the provisions of Section 12315, upon
compliance with the provisions of Sections 12315.1, and 12320, an
origination fee of a sum not to exceed fifty dollars ($50) may be
charged;
   (b) A fee not to exceed four dollars ($4) per disbursement on
recurring obligations, consisting of current rent payments or
obligations which are secured by a first mortgage or first trust deed
on real property, may be charged.
   (c) A fee not to exceed one dollar ($1) on other recurring
obligations.
   When a debtor has not canceled or defaulted on the performance of
his contract with the prorater within 12 months after execution of
the prorate contract, the prorater shall refund any origination fee
charged to the debtor. At least once each month the prorater shall
pay not less than 70 percent of all funds received from the debtor to
the creditors of the debtor.



12314.1.  A cancellation fee or termination penalty may not be
charged to a debtor.



12315.  A prorater shall not receive any fee unless he has the
consent of at least 51 percent of the total amount of indebtedness
and of the number of creditors listed in the prorater's contract with
the debtor, or such like number of creditors have accepted a
distribution of payment.



12315.1.  A prorater shall notify, in writing, all creditors listed
in the prorate contract of the debtors desire to engage the services
of the prorater within five days of the effective date of the
contract as defined in Section 12320. The notification shall include
a notice as to the proposed monthly payment to be made to the
creditor. Every contract between a prorater and a debtor shall list
every debt to be prorated with the creditor's name, and disclose the
total of all such debts.



12316.  If a prorater contracts for, receives or makes any charge in
excess of the maximum permitted by this division, except as the
result of an accidental and bona fide error, the prorater's contract
with the debtor shall be void and the prorater shall return to the
debtor all charges received from the debtor.



12317.  A prorater shall not purchase from a creditor any obligation
of a debtor.



12318.  A prorater shall not take:
   (a) Any contract, promise to pay, or other instrument which has
any blank spaces when signed by a debtor;
   (b) Any negotiable instrument for the prorater's charges;
   (c) Any note, wage assignment, real estate or chattel mortgage, or
other security to secure the prorater's charges;
   (d) Any confession of judgment or power of attorney to confess
judgment against the debtor or to appear for the debtor in a judicial
proceeding.
   (e) Concurrent with the signing of the contract or as part of the
contract or as part of the application for the contract a release of
any obligation to be performed on the part of the prorater.



12319.  Every contract between a prorater and a debtor shall:
   (a) List every debt to be prorated with the creditor's name and
disclose the total of all such debts;
   (b) Provide payments reasonably within the ability of the debtor
to pay in precise terms;
   (c) Disclose in precise terms the rate and amount of the prorater'
s charge;
   (d) Disclose the approximate number and amount of installments
required to pay the debts in full;
   (e) Disclose the name and address of the prorater and of the
debtor;
   (f) Contain such other provision or disclosures as the
commissioner shall determine is necessary for the protection of the
debtor and the proper conduct of business by a prorater.



12320.  A prorater shall deliver a copy of any contract or agreement
between the prorater and a debtor to the debtor immediately after
the debtor executes it, and the debtor's copy shall be executed by
the prorater. A contract shall not be effective until a debtor has
made a payment to the prorater for distribution to his creditors.




12321.  Unless paid by check or money order a prorater shall deliver
a receipt to a debtor for each payment within five (5) days after
receipt of a payment.


12322.  At least once in each six (6) months, the prorater shall
render an accounting to the debtor which shall itemize the total
amount received from the debtor, the total amount paid to each
creditor, the total amount which any creditor has agreed to accept as
payment in full on any debt owed him by the debtor, the amount of
charges deducted, and any amount held in reserve. A prorater shall in
addition render such an account to a debtor within seven days after
written demand.



12323.  A prorater shall not lend money or credit.



12324.  A prorater shall not:
   (a) Offer, pay, or give any cash, fee, gift, bonus, premium,
reward, or other compensation to any person for referring any
prospective customer to the prorater;
   (b) Receive any cash, fee, gift, bonus, premium, reward, or other
compensation from any person other than the debtor in connection with
his activities as a prorater.



12325.  A prorater shall not solicit or require a debtor to purchase
or agree to purchase any policy of insurance.



12326.  A special prorater shall not advertise in any manner or
otherwise hold himself out to the public as a general prorater or as
qualified to do business as a general prorater unless he holds a
valid unrevoked general proraters license.




12327.  Nothing in this division shall be deemed to authorize the
performance, directly or indirectly, of an act or acts constituting
the practice of law by a prorater, business agent, check seller, or
by any person, firm, corporation or organization described, or
engaging in a transaction specified in subdivision (a), (b), (d),
(e), (f), (g), or (h) of Section 12100.
   Without limiting the generality of the foregoing and other
applicable laws, the following act or acts, when done by the owner,
manager or employee of a prorater, in connection with a prorating
transaction, shall be deemed to constitute the unlawful practice of
law:
   (a) Preparation, advising or signing of a release of attachment or
garnishment, stipulation, affidavit for exemption, compromise
agreement or other legal or court document;
   (b) The furnishing of legal advice or performance of legal
services of any kind.
   No prorater (including an owner, manager or employee of a
prorater) shall (1) represent that he or she is authorized or
competent to furnish legal advice or perform legal services; (2)
assume authority on behalf of creditors or a debtor or accept a power
of attorney authorizing it to employ or terminate the services of an
attorney or to arrange the terms of or compensate for such services;
(3) communicate with the debtor or creditor or any other person in
the name of an attorney or upon the stationery of an attorney or
prepare any form or instrument which only attorneys are authorized to
prepare.


12328.  (a) No collection agency may be maintained in the same
premises as a prorating organization unless such prorating
organization is exempt under the provisions of this division.
   (b) No prorater's license shall be issued to a collection agency.




12329.  It shall be unlawful for any prorater to disclose the list
of creditors of a debtor to any individual or firm for the purpose of
soliciting the accounts and such disclosure shall be ground for
revocation of license.


12330.  The commissioner shall have power and authority to
promulgate rules and regulations governing the form and wording of
advertising to be used by proraters. The issuance, distribution or
placement of any advertising by a prorater which is in conflict with
such rules and regulations shall be ground for the revocation of its
license.



12331.  Within the organization of each prorater corporation, either
as an owner, officer, or employee, there shall be one or more
persons possessing a minimum of five years experience in consumer
credit extension or credit collection activity. At least one such
qualified person shall be stationed on duty at each business location
during the time the location is open for business.



12332.  (a) It is unlawful for any person to knowingly alter,
destroy, mutilate, conceal, cover up, falsify, or make a false entry
in any record, document, or tangible object with the intent to
impede, obstruct, or influence the administration or enforcement of
any provision of this division.
   (b) It is unlawful for any person to knowingly make an untrue
statement to the commissioner during the course of licensing,
investigation, or examination, with the intent to impede, obstruct,
or influence the administration or enforcement of any provision of
this division.


State Codes and Statutes

Statutes > California > Fin > 12300-12332

FINANCIAL CODE
SECTION 12300-12332



12300.  The commissioner may make general rules and regulations and
specific rulings, demands, and findings for the enforcement of this
division.


12300.1.  Licensees shall observe reasonable precautions against
theft or alteration of checks, drafts or money orders, and against
burglary or holdup.


12300.2.  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.




12300.3.  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.



12300.4.  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.


12300.5.  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.



12300.6.  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.


12301.  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.


12301.1.  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.



12301.2.  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.



12301.3.  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.


12301.4.  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.



12301.5.  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.



12302.  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.



12303.  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.



12304.  (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.



12305.  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.



12306.  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.



12307.  The commissioner may require the attendance of witnesses and
examine under oath all persons whose testimony he requires relative
to any examination or investigation.



12307.1.  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.



12307.2.  If the commissioner finds as a result of an examination or
report that a licensee is insolvent or conducting business in such
an unsafe or injurious manner as to render its further operations
hazardous to the public, he 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 his 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.


12307.3.  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.



12307.4.  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.



12307.5.  (a) For any licensee, a disciplinary action taken by the
State of California, another state, an agency of the federal
government, or another country for an action substantially related to
the activity regulated under this division may be grounds for
disciplinary action by the commissioner. A certified copy of the
record of the disciplinary action taken against the licensee by the
State of California, other state, agency of the federal government,
or other country shall be conclusive evidence of the events related
therein.
   (b) Nothing in this section shall preclude the commissioner from
applying a specific statutory provision in this division providing
for discipline against a licensee as a result of disciplinary action
taken against a licensee by the State of California, another state,
an agency of the federal government, or another country.



12309.  (a) A schedule of the fees charged by a licensee shall be
posted in a conspicuous place in the place of business of the
licensee and its agents. A licensee and its agents shall not charge
fees in excess of the posted fees.
   (b) Each licensee and its agents shall prominently post on the
premises of each office of the licensee and on the premises of each
agent, a notice clearly stating that checks or money orders issued by
the licensee or its agents are not insured by the federal
government, the state government, or any other public or private
entity. This notice shall be printed in English and in the same
language principally used by the licensee or any agent of the
licensee to advertise, solicit, or negotiate, either orally or in
writing, with respect to the purchase of checks or money orders. The
information required in this notice shall be clear, legible, and in
letters not less than one-half inch in height. The notice shall be
posted in a conspicuous location in the unobstructed view of the
public within the premises. In those locations operated by an agent
of the licensee, the agent, and not the licensee, shall be
responsible for the failure to properly post the required notice.




12310.  A licensee under this division shall not sell checks payable
to bearer, to cash, or to the purchaser, but a licensee may sell a
check in which the name of the payee is not designated in any way if
the check does not exceed one hundred fifty dollars ($150) in amount.



12311.  No licensee shall advertise, print, display, publish,
distribute, or broadcast, or cause or permit to be advertised,
printed, displayed, published, distributed, or broadcast, in any
manner whatsoever, any statement or representation which is false,
misleading, or deceptive, or which omits to state material
information, or which refers to the supervision of such licensee by
the State of California or any department or official thereof. The
commissioner may order any licensee to desist from any conduct which
he shall find to be a violation of the foregoing provisions.




12312.  An agreement between one licensed to engage in the business
of selling checks, drafts, money orders, or other commercial paper
serving the same purpose, and one undertaking to act in that business
as an agent of the licensee, shall be in writing.
   Such a licensee shall not pay such an agent any compensation as
consideration for becoming an agent, other than that specified in
their written agency agreement, in any manner, directly or
indirectly, or by any method, practice or device whatsoever.
   The commissioner may order any licensee to desist from any conduct
which the commissioner shall find to be a violation of the foregoing
provisions of this section.



12313.5.  Nothing in this chapter shall be construed as authorizing
the examination, inspection or auditing of the books and records of
any client of a business agent while such books and records are in
the possession of the business agent without the express consent of
the client.


12314.  The total charges received by a prorater, or any other
person for the prorater's services, may not exceed in the aggregate
twelve percent (12%) for the first three thousand dollars ($3,000),
eleven percent (11%) for the next two thousand dollars ($2,000), and
ten percent (10%) for any of the remaining payments distributed by a
prorater to the creditors of a debtor, except for payments made on
recurrent obligations. Recurring obligations shall be defined for the
purpose of this section as follows: current rent payments, current
utility payments, current telephone bills, current alimony payments,
current monthly insurance premium payments, and payments made on
obligations which are secured by a first mortgage or first deed of
trust on real property.
   (a) Notwithstanding the provisions of Section 12315, upon
compliance with the provisions of Sections 12315.1, and 12320, an
origination fee of a sum not to exceed fifty dollars ($50) may be
charged;
   (b) A fee not to exceed four dollars ($4) per disbursement on
recurring obligations, consisting of current rent payments or
obligations which are secured by a first mortgage or first trust deed
on real property, may be charged.
   (c) A fee not to exceed one dollar ($1) on other recurring
obligations.
   When a debtor has not canceled or defaulted on the performance of
his contract with the prorater within 12 months after execution of
the prorate contract, the prorater shall refund any origination fee
charged to the debtor. At least once each month the prorater shall
pay not less than 70 percent of all funds received from the debtor to
the creditors of the debtor.



12314.1.  A cancellation fee or termination penalty may not be
charged to a debtor.



12315.  A prorater shall not receive any fee unless he has the
consent of at least 51 percent of the total amount of indebtedness
and of the number of creditors listed in the prorater's contract with
the debtor, or such like number of creditors have accepted a
distribution of payment.



12315.1.  A prorater shall notify, in writing, all creditors listed
in the prorate contract of the debtors desire to engage the services
of the prorater within five days of the effective date of the
contract as defined in Section 12320. The notification shall include
a notice as to the proposed monthly payment to be made to the
creditor. Every contract between a prorater and a debtor shall list
every debt to be prorated with the creditor's name, and disclose the
total of all such debts.



12316.  If a prorater contracts for, receives or makes any charge in
excess of the maximum permitted by this division, except as the
result of an accidental and bona fide error, the prorater's contract
with the debtor shall be void and the prorater shall return to the
debtor all charges received from the debtor.



12317.  A prorater shall not purchase from a creditor any obligation
of a debtor.



12318.  A prorater shall not take:
   (a) Any contract, promise to pay, or other instrument which has
any blank spaces when signed by a debtor;
   (b) Any negotiable instrument for the prorater's charges;
   (c) Any note, wage assignment, real estate or chattel mortgage, or
other security to secure the prorater's charges;
   (d) Any confession of judgment or power of attorney to confess
judgment against the debtor or to appear for the debtor in a judicial
proceeding.
   (e) Concurrent with the signing of the contract or as part of the
contract or as part of the application for the contract a release of
any obligation to be performed on the part of the prorater.



12319.  Every contract between a prorater and a debtor shall:
   (a) List every debt to be prorated with the creditor's name and
disclose the total of all such debts;
   (b) Provide payments reasonably within the ability of the debtor
to pay in precise terms;
   (c) Disclose in precise terms the rate and amount of the prorater'
s charge;
   (d) Disclose the approximate number and amount of installments
required to pay the debts in full;
   (e) Disclose the name and address of the prorater and of the
debtor;
   (f) Contain such other provision or disclosures as the
commissioner shall determine is necessary for the protection of the
debtor and the proper conduct of business by a prorater.



12320.  A prorater shall deliver a copy of any contract or agreement
between the prorater and a debtor to the debtor immediately after
the debtor executes it, and the debtor's copy shall be executed by
the prorater. A contract shall not be effective until a debtor has
made a payment to the prorater for distribution to his creditors.




12321.  Unless paid by check or money order a prorater shall deliver
a receipt to a debtor for each payment within five (5) days after
receipt of a payment.


12322.  At least once in each six (6) months, the prorater shall
render an accounting to the debtor which shall itemize the total
amount received from the debtor, the total amount paid to each
creditor, the total amount which any creditor has agreed to accept as
payment in full on any debt owed him by the debtor, the amount of
charges deducted, and any amount held in reserve. A prorater shall in
addition render such an account to a debtor within seven days after
written demand.



12323.  A prorater shall not lend money or credit.



12324.  A prorater shall not:
   (a) Offer, pay, or give any cash, fee, gift, bonus, premium,
reward, or other compensation to any person for referring any
prospective customer to the prorater;
   (b) Receive any cash, fee, gift, bonus, premium, reward, or other
compensation from any person other than the debtor in connection with
his activities as a prorater.



12325.  A prorater shall not solicit or require a debtor to purchase
or agree to purchase any policy of insurance.



12326.  A special prorater shall not advertise in any manner or
otherwise hold himself out to the public as a general prorater or as
qualified to do business as a general prorater unless he holds a
valid unrevoked general proraters license.




12327.  Nothing in this division shall be deemed to authorize the
performance, directly or indirectly, of an act or acts constituting
the practice of law by a prorater, business agent, check seller, or
by any person, firm, corporation or organization described, or
engaging in a transaction specified in subdivision (a), (b), (d),
(e), (f), (g), or (h) of Section 12100.
   Without limiting the generality of the foregoing and other
applicable laws, the following act or acts, when done by the owner,
manager or employee of a prorater, in connection with a prorating
transaction, shall be deemed to constitute the unlawful practice of
law:
   (a) Preparation, advising or signing of a release of attachment or
garnishment, stipulation, affidavit for exemption, compromise
agreement or other legal or court document;
   (b) The furnishing of legal advice or performance of legal
services of any kind.
   No prorater (including an owner, manager or employee of a
prorater) shall (1) represent that he or she is authorized or
competent to furnish legal advice or perform legal services; (2)
assume authority on behalf of creditors or a debtor or accept a power
of attorney authorizing it to employ or terminate the services of an
attorney or to arrange the terms of or compensate for such services;
(3) communicate with the debtor or creditor or any other person in
the name of an attorney or upon the stationery of an attorney or
prepare any form or instrument which only attorneys are authorized to
prepare.


12328.  (a) No collection agency may be maintained in the same
premises as a prorating organization unless such prorating
organization is exempt under the provisions of this division.
   (b) No prorater's license shall be issued to a collection agency.




12329.  It shall be unlawful for any prorater to disclose the list
of creditors of a debtor to any individual or firm for the purpose of
soliciting the accounts and such disclosure shall be ground for
revocation of license.


12330.  The commissioner shall have power and authority to
promulgate rules and regulations governing the form and wording of
advertising to be used by proraters. The issuance, distribution or
placement of any advertising by a prorater which is in conflict with
such rules and regulations shall be ground for the revocation of its
license.



12331.  Within the organization of each prorater corporation, either
as an owner, officer, or employee, there shall be one or more
persons possessing a minimum of five years experience in consumer
credit extension or credit collection activity. At least one such
qualified person shall be stationed on duty at each business location
during the time the location is open for business.



12332.  (a) It is unlawful for any person to knowingly alter,
destroy, mutilate, conceal, cover up, falsify, or make a false entry
in any record, document, or tangible object with the intent to
impede, obstruct, or influence the administration or enforcement of
any provision of this division.
   (b) It is unlawful for any person to knowingly make an untrue
statement to the commissioner during the course of licensing,
investigation, or examination, with the intent to impede, obstruct,
or influence the administration or enforcement of any provision of
this division.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Fin > 12300-12332

FINANCIAL CODE
SECTION 12300-12332



12300.  The commissioner may make general rules and regulations and
specific rulings, demands, and findings for the enforcement of this
division.


12300.1.  Licensees shall observe reasonable precautions against
theft or alteration of checks, drafts or money orders, and against
burglary or holdup.


12300.2.  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.




12300.3.  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.



12300.4.  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.


12300.5.  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.



12300.6.  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.


12301.  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.


12301.1.  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.



12301.2.  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.



12301.3.  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.


12301.4.  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.



12301.5.  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.



12302.  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.



12303.  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.



12304.  (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.



12305.  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.



12306.  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.



12307.  The commissioner may require the attendance of witnesses and
examine under oath all persons whose testimony he requires relative
to any examination or investigation.



12307.1.  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.



12307.2.  If the commissioner finds as a result of an examination or
report that a licensee is insolvent or conducting business in such
an unsafe or injurious manner as to render its further operations
hazardous to the public, he 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 his 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.


12307.3.  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.



12307.4.  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.



12307.5.  (a) For any licensee, a disciplinary action taken by the
State of California, another state, an agency of the federal
government, or another country for an action substantially related to
the activity regulated under this division may be grounds for
disciplinary action by the commissioner. A certified copy of the
record of the disciplinary action taken against the licensee by the
State of California, other state, agency of the federal government,
or other country shall be conclusive evidence of the events related
therein.
   (b) Nothing in this section shall preclude the commissioner from
applying a specific statutory provision in this division providing
for discipline against a licensee as a result of disciplinary action
taken against a licensee by the State of California, another state,
an agency of the federal government, or another country.



12309.  (a) A schedule of the fees charged by a licensee shall be
posted in a conspicuous place in the place of business of the
licensee and its agents. A licensee and its agents shall not charge
fees in excess of the posted fees.
   (b) Each licensee and its agents shall prominently post on the
premises of each office of the licensee and on the premises of each
agent, a notice clearly stating that checks or money orders issued by
the licensee or its agents are not insured by the federal
government, the state government, or any other public or private
entity. This notice shall be printed in English and in the same
language principally used by the licensee or any agent of the
licensee to advertise, solicit, or negotiate, either orally or in
writing, with respect to the purchase of checks or money orders. The
information required in this notice shall be clear, legible, and in
letters not less than one-half inch in height. The notice shall be
posted in a conspicuous location in the unobstructed view of the
public within the premises. In those locations operated by an agent
of the licensee, the agent, and not the licensee, shall be
responsible for the failure to properly post the required notice.




12310.  A licensee under this division shall not sell checks payable
to bearer, to cash, or to the purchaser, but a licensee may sell a
check in which the name of the payee is not designated in any way if
the check does not exceed one hundred fifty dollars ($150) in amount.



12311.  No licensee shall advertise, print, display, publish,
distribute, or broadcast, or cause or permit to be advertised,
printed, displayed, published, distributed, or broadcast, in any
manner whatsoever, any statement or representation which is false,
misleading, or deceptive, or which omits to state material
information, or which refers to the supervision of such licensee by
the State of California or any department or official thereof. The
commissioner may order any licensee to desist from any conduct which
he shall find to be a violation of the foregoing provisions.




12312.  An agreement between one licensed to engage in the business
of selling checks, drafts, money orders, or other commercial paper
serving the same purpose, and one undertaking to act in that business
as an agent of the licensee, shall be in writing.
   Such a licensee shall not pay such an agent any compensation as
consideration for becoming an agent, other than that specified in
their written agency agreement, in any manner, directly or
indirectly, or by any method, practice or device whatsoever.
   The commissioner may order any licensee to desist from any conduct
which the commissioner shall find to be a violation of the foregoing
provisions of this section.



12313.5.  Nothing in this chapter shall be construed as authorizing
the examination, inspection or auditing of the books and records of
any client of a business agent while such books and records are in
the possession of the business agent without the express consent of
the client.


12314.  The total charges received by a prorater, or any other
person for the prorater's services, may not exceed in the aggregate
twelve percent (12%) for the first three thousand dollars ($3,000),
eleven percent (11%) for the next two thousand dollars ($2,000), and
ten percent (10%) for any of the remaining payments distributed by a
prorater to the creditors of a debtor, except for payments made on
recurrent obligations. Recurring obligations shall be defined for the
purpose of this section as follows: current rent payments, current
utility payments, current telephone bills, current alimony payments,
current monthly insurance premium payments, and payments made on
obligations which are secured by a first mortgage or first deed of
trust on real property.
   (a) Notwithstanding the provisions of Section 12315, upon
compliance with the provisions of Sections 12315.1, and 12320, an
origination fee of a sum not to exceed fifty dollars ($50) may be
charged;
   (b) A fee not to exceed four dollars ($4) per disbursement on
recurring obligations, consisting of current rent payments or
obligations which are secured by a first mortgage or first trust deed
on real property, may be charged.
   (c) A fee not to exceed one dollar ($1) on other recurring
obligations.
   When a debtor has not canceled or defaulted on the performance of
his contract with the prorater within 12 months after execution of
the prorate contract, the prorater shall refund any origination fee
charged to the debtor. At least once each month the prorater shall
pay not less than 70 percent of all funds received from the debtor to
the creditors of the debtor.



12314.1.  A cancellation fee or termination penalty may not be
charged to a debtor.



12315.  A prorater shall not receive any fee unless he has the
consent of at least 51 percent of the total amount of indebtedness
and of the number of creditors listed in the prorater's contract with
the debtor, or such like number of creditors have accepted a
distribution of payment.



12315.1.  A prorater shall notify, in writing, all creditors listed
in the prorate contract of the debtors desire to engage the services
of the prorater within five days of the effective date of the
contract as defined in Section 12320. The notification shall include
a notice as to the proposed monthly payment to be made to the
creditor. Every contract between a prorater and a debtor shall list
every debt to be prorated with the creditor's name, and disclose the
total of all such debts.



12316.  If a prorater contracts for, receives or makes any charge in
excess of the maximum permitted by this division, except as the
result of an accidental and bona fide error, the prorater's contract
with the debtor shall be void and the prorater shall return to the
debtor all charges received from the debtor.



12317.  A prorater shall not purchase from a creditor any obligation
of a debtor.



12318.  A prorater shall not take:
   (a) Any contract, promise to pay, or other instrument which has
any blank spaces when signed by a debtor;
   (b) Any negotiable instrument for the prorater's charges;
   (c) Any note, wage assignment, real estate or chattel mortgage, or
other security to secure the prorater's charges;
   (d) Any confession of judgment or power of attorney to confess
judgment against the debtor or to appear for the debtor in a judicial
proceeding.
   (e) Concurrent with the signing of the contract or as part of the
contract or as part of the application for the contract a release of
any obligation to be performed on the part of the prorater.



12319.  Every contract between a prorater and a debtor shall:
   (a) List every debt to be prorated with the creditor's name and
disclose the total of all such debts;
   (b) Provide payments reasonably within the ability of the debtor
to pay in precise terms;
   (c) Disclose in precise terms the rate and amount of the prorater'
s charge;
   (d) Disclose the approximate number and amount of installments
required to pay the debts in full;
   (e) Disclose the name and address of the prorater and of the
debtor;
   (f) Contain such other provision or disclosures as the
commissioner shall determine is necessary for the protection of the
debtor and the proper conduct of business by a prorater.



12320.  A prorater shall deliver a copy of any contract or agreement
between the prorater and a debtor to the debtor immediately after
the debtor executes it, and the debtor's copy shall be executed by
the prorater. A contract shall not be effective until a debtor has
made a payment to the prorater for distribution to his creditors.




12321.  Unless paid by check or money order a prorater shall deliver
a receipt to a debtor for each payment within five (5) days after
receipt of a payment.


12322.  At least once in each six (6) months, the prorater shall
render an accounting to the debtor which shall itemize the total
amount received from the debtor, the total amount paid to each
creditor, the total amount which any creditor has agreed to accept as
payment in full on any debt owed him by the debtor, the amount of
charges deducted, and any amount held in reserve. A prorater shall in
addition render such an account to a debtor within seven days after
written demand.



12323.  A prorater shall not lend money or credit.



12324.  A prorater shall not:
   (a) Offer, pay, or give any cash, fee, gift, bonus, premium,
reward, or other compensation to any person for referring any
prospective customer to the prorater;
   (b) Receive any cash, fee, gift, bonus, premium, reward, or other
compensation from any person other than the debtor in connection with
his activities as a prorater.



12325.  A prorater shall not solicit or require a debtor to purchase
or agree to purchase any policy of insurance.



12326.  A special prorater shall not advertise in any manner or
otherwise hold himself out to the public as a general prorater or as
qualified to do business as a general prorater unless he holds a
valid unrevoked general proraters license.




12327.  Nothing in this division shall be deemed to authorize the
performance, directly or indirectly, of an act or acts constituting
the practice of law by a prorater, business agent, check seller, or
by any person, firm, corporation or organization described, or
engaging in a transaction specified in subdivision (a), (b), (d),
(e), (f), (g), or (h) of Section 12100.
   Without limiting the generality of the foregoing and other
applicable laws, the following act or acts, when done by the owner,
manager or employee of a prorater, in connection with a prorating
transaction, shall be deemed to constitute the unlawful practice of
law:
   (a) Preparation, advising or signing of a release of attachment or
garnishment, stipulation, affidavit for exemption, compromise
agreement or other legal or court document;
   (b) The furnishing of legal advice or performance of legal
services of any kind.
   No prorater (including an owner, manager or employee of a
prorater) shall (1) represent that he or she is authorized or
competent to furnish legal advice or perform legal services; (2)
assume authority on behalf of creditors or a debtor or accept a power
of attorney authorizing it to employ or terminate the services of an
attorney or to arrange the terms of or compensate for such services;
(3) communicate with the debtor or creditor or any other person in
the name of an attorney or upon the stationery of an attorney or
prepare any form or instrument which only attorneys are authorized to
prepare.


12328.  (a) No collection agency may be maintained in the same
premises as a prorating organization unless such prorating
organization is exempt under the provisions of this division.
   (b) No prorater's license shall be issued to a collection agency.




12329.  It shall be unlawful for any prorater to disclose the list
of creditors of a debtor to any individual or firm for the purpose of
soliciting the accounts and such disclosure shall be ground for
revocation of license.


12330.  The commissioner shall have power and authority to
promulgate rules and regulations governing the form and wording of
advertising to be used by proraters. The issuance, distribution or
placement of any advertising by a prorater which is in conflict with
such rules and regulations shall be ground for the revocation of its
license.



12331.  Within the organization of each prorater corporation, either
as an owner, officer, or employee, there shall be one or more
persons possessing a minimum of five years experience in consumer
credit extension or credit collection activity. At least one such
qualified person shall be stationed on duty at each business location
during the time the location is open for business.



12332.  (a) It is unlawful for any person to knowingly alter,
destroy, mutilate, conceal, cover up, falsify, or make a false entry
in any record, document, or tangible object with the intent to
impede, obstruct, or influence the administration or enforcement of
any provision of this division.
   (b) It is unlawful for any person to knowingly make an untrue
statement to the commissioner during the course of licensing,
investigation, or examination, with the intent to impede, obstruct,
or influence the administration or enforcement of any provision of
this division.


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