Chapter 3. Licensing of California Financial Code >> Division 3. >> Chapter 3.
No person shall engage in the business, for compensation, of
selling checks, drafts, money orders, or other commercial paper
serving the same purpose, or of receiving money as agent of an
obligor for the purpose of paying bills, invoices, or accounts of
such obligor, or acting as a prorater, nor shall any person, without
direct compensation and not as an authorized agent for a utility
company, accept money for the purpose of forwarding it to others in
payment of utility bills, without first obtaining a license from the
A license to engage in the business of selling checks,
drafts, or money orders, or of receiving money as agent of an obligor
for the purpose of paying bills, invoices, or accounts of such
obligor (except a business agent or special prorater), or to accept,
without direct compensation, money for the purpose of forwarding it
to others in payment of utility bills, shall only be issued to a
corporation organized under the laws of this State for that purpose.
A license as a business agent or special prorater may be
issued to an individual.
No licensee under this division shall engage in the
business of selling checks, drafts, or money orders, or other
commercial paper serving the same purpose or receiving money for the
purpose of paying bills, invoices, or accounts of an obligor (except
as business agent, or special or general prorater) or accepting money
for the purpose of forwarding it to others in payment of bills at
any location outside of the State of California nor shall any such
licensee have agencies engaging in any such business at any location
outside of the State of California.
The commissioner shall classify and license applicants for
a proraters license in accordance with the nature of their existing
or proposed business and the extent of regulation required thereby in
the public interest as follows:
(a) A special proraters license shall be issued to a qualified
applicant to engage in business as a business agent.
(b) A general proraters license shall be issued to all other
Whenever the term "prorater" is used in this division with
reference to a licensee it shall be deemed to mean a general prorater
unless otherwise provided.
(a) An application for a license shall be in writing, under
oath, and in a form prescribed by the commissioner and shall contain
the name, and the address both of the residence and place of
business, of the applicant and if the applicant is a partnership or
association, of every member thereof, and if a corporation, of every
officer and director thereof.
(b) Notwithstanding any other law, the commissioner may by rule or
order prescribe circumstances under which to accept electronic
records or electronic signatures. This section does not require the
commissioner to accept electronic records or electronic signatures.
(c) For purposes of this section, the following terms have the
(1) "Electronic record" means an initial license application, or
material modification of that license application, and any other
record created, generated, sent, communicated, received, or stored by
electronic means. "Electronic record" also includes, but is not
limited to, all of the following:
(A) An application, amendment, supplement, and exhibit, filed for
any license, consent, or other authority.
(B) A financial statement, report, or advertising.
(C) An order, license, consent, or other authority.
(D) A notice of public hearing, accusation, and statement of
issues in connection with any application, license, consent, or other
(E) A proposed decision of a hearing officer and a decision of the
(F) The transcripts of a hearing.
(G) A release, newsletter, interpretive opinion, determination, or
(H) Correspondence between a party and the commissioner directly
relating to any document listed in subparagraphs (A) to (G),
(2) "Electronic signature" means an electronic sound, symbol, or
process attached to or logically associated with an electronic record
and executed or adopted by a person with the intent to sign the
(d) The Legislature finds and declares that the Department of
Business Oversight has continuously implemented methods to accept
records filed electronically, and is encouraged to continue to expand
its use of electronic filings to the extent feasible, as budget,
resources, and equipment are made available to accomplish that goal.
If the business is to be conducted at a specific address or
addresses, the address or addresses at which the business is to be
conducted shall be included in the application.
If the business is to be conducted from a mobile unit, the
California state registration number or other identification of such
mobile unit and the area in which the applicant proposes to operate
such mobile unit shall be included in the application.
The application shall specify the type of business for which
a license is requested and shall also contain such other information
as the commissioner may reasonably require.
(a) A licensed bill payer, general prorater, or special
prorater who does not qualify to make use of agencies in the conduct
of its business at all times shall maintain a surety bond in an
amount as required by subdivision (a) of Section 12206 and assets of
at least ten thousand dollars ($10,000) in excess of its liabilities,
of which assets at least five thousand dollars ($5,000) shall be
liquid assets. A licensed bill payer, general prorater, or special
prorater is qualified to make use of agencies in the conduct of its
business if at all times it shall have capital of at least one
hundred thousand dollars ($100,000) and maintain a surety bond in an
amount as required by subdivision (a) of Section 12206 and assets,
excluding goodwill and other intangible assets, of at least one
hundred thousand dollars ($100,000) in excess of its liabilities, of
which assets at least twenty-five thousand dollars ($25,000) shall be
(b) A licensed check seller, whether or not qualified to make use
of agencies in the conduct of its business, shall at all times have
capital of at least five hundred thousand dollars ($500,000) and
maintain a surety bond in an amount as required by subdivision (b) of
Section 12206 and assets, excluding goodwill and other intangible
assets, of at least five hundred thousand dollars ($500,000) in
excess of its liabilities, of which assets at least one hundred fifty
thousand dollars ($150,000) are liquid assets. In the alternative, a
licensed check seller may satisfy the assets and surety bond
requirements of this subdivision by assets, excluding goodwill and
other intangible assets, of at least one million dollars ($1,000,000)
in excess of liabilities, of which assets at least one hundred fifty
thousand dollars ($150,000) are liquid assets, and a surety bond,
approved by the commissioner, in an amount of one hundred thousand
(c) The commissioner may determine by rule or order what assets
are liquid assets within the meaning of this section and may
determine by specific ruling that a particular asset is or is not a
liquid asset within the meaning of this section.
(d) The commissioner may by order increase the net asset and
liquid asset requirements of subdivision (b) for any licensed check
seller when, as a result of any examination or report under Section
12307.3, it appears to the commissioner that it is necessary for the
safety and soundness of that licensed check seller.
(a) If the applicant is to engage in the business of
receiving money for the purpose of paying bills, invoices or accounts
of an obligor, the applicant shall file with the commissioner
concurrently with its application for a license, a surety bond to be
approved by the commissioner, in which the applicant is the
principal, in the minimum amount of twenty-five thousand dollars
($25,000). A deposit given instead of the bond required by this
section shall not be deemed an asset of the applicant or licensee for
the purpose of complying with Section 12205.
(b) If the applicant is to engage in the business of check
selling, the applicant shall file with the commissioner concurrently
with its application for a license, a surety bond to be approved by
the commissioner, in which the applicant is the principal, in the
minimum amount of five hundred thousand dollars ($500,000). A deposit
given instead of the bond required by this section shall not be
deemed an asset of the applicant or licensee for the purpose of
complying with Section 12205.
The bond shall be approved by the commissioner. The bond
shall run to the state for the use of the state and of any person who
has a cause of action against the principal under the provisions of
The bond shall be conditioned that the obligor will
faithfully conform to and abide by the provisions of this division
and of all rules and regulations made by the commissioner pursuant to
this division, and will honestly and faithfully apply all funds
received and will faithfully and honestly perform all obligations and
undertakings under this division, and will pay to the State and to
any person all money that becomes due and owing to the State or to
such person from the obligor under the provisions of this division.
The surety under such bond may pay the full amount of its liability
thereunder to a receiver appointed by a superior court pursuant to
Section 12307.2 of this code in lieu of payment to the State or
persons having a cause of action against the obligor of the bond, and
upon such payment the surety is completely released from further
liability under such bond.
The bond shall remain in force and effect until the surety
is released from liability by the commissioner, or until the bond is
canceled by the surety.
No action may be brought on the bond by any person after the
expiration of two years from the time when the act or default
complained of occurred.
When an action is commenced on the bond of a licensee the
commissioner may require the filing of a new bond, and immediately
upon the recovery of any action on the bond the licensee shall file a
new bond. Failure to file a new bond within 10 days of the recovery
on a bond, or within 10 days after notification that a bond is
required, constitutes sufficient grounds for the suspension or
revocation of a license.
(a) An applicant at the time of filing an application for a
license under this division shall pay to the commissioner the sum of
fifty dollars ($50) as a fee for investigating the application and
two hundred dollars ($200) as an application fee. The investigation
fee and application fee are not refundable if an application is
denied or withdrawn.
(b) (1) Each licensee shall pay to the commissioner its pro rata
share of all costs and expenses, reasonably incurred in the
administration of this division as estimated by the commissioner for
the ensuing year and any deficit actually incurred or anticipated in
the administration of the programs in the year in which such
assessment is made. The pro rata share shall be the proportion which
a licensee's gross income bears to the aggregate gross income of all
licensees as shown by the annual financial reports to the
commissioner. The pro rata share shall not include the costs of any
examinations provided for in Section 12306, unless they cannot be
collected from the licensee examined.
(2) On or before the 30th day of May in each year, the
commissioner shall notify each licensee by mail of the amount
assessed and levied against it and that amount shall be paid within
20 days thereafter. If payment is not made within 20 days, the
commissioner shall assess and collect a penalty in addition to the
assessment, of 1 percent of the assessment for each month or part of
a month that the payment is delayed or withheld.
(3) In the levying and collection of the assessment, a licensee
shall not be assessed for nor be permitted to pay less than one
hundred fifty dollars ($150) per year.
(4) If a licensee fails to pay the assessment on or before the
30th day of June following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to such licensee. If, after such an order is made, a request
for hearing is filed in writing and a hearing is not held within 60
days thereafter, the order is deemed rescinded as of its effective
date. During any period when its certificate is revoked or suspended,
a licensee shall not conduct business pursuant to this division
except as may be permitted by order of the commissioner; provided,
however, that the revocation, suspension or surrender of a
certificate shall not affect the powers of the commissioner as
provided in this division.
(a) Upon the filing of the application and the payment of
the fees and the approval of the bond, the commissioner shall
investigate and examine the following:
(1) The background and experience of the applicant and of the
partners or members thereof if the applicant is a partnership or
association, and of the officers and directors thereof if the
applicant is a corporation, and of any organizers, incorporators,
managers, or stockholders.
(2) The plan of business of the applicant. The plan of business
should include, but not be limited to: (A) a feasibility and market
study; (B) pro forma financial statements, including all underlying
assumptions; (C) a description of the geographical area to be served
by agents; (D) a description of the accounting system to be used; (E)
a description of the internal control procedures for the operations
of the proposed business, and for its agents; and (F) plans for
future expansion of business operations.
(3) Any other factors and circumstances bearing on the applicant
or any proposed facility that in the opinion of the commissioner may
(b) If the commissioner determines that the applicant has
satisfied the provisions of this division and does not find facts
constituting reasons for denial as specified in Section 12221, the
commissioner shall issue and deliver a license to the applicant to
engage in business in accordance with the provisions of this
Each license shall state the following:
(a) The name of the licensee, and if the licensee is a partnership
or association the names of the members, or if the licensee is a
corporation the date and place of its incorporation.
(b) The address at which such business is to be conducted.
(c) The type of business licensed.
The license shall be kept conspicuously posted in the
principal place of business of the licensee.
The license is not transferable or assignable.
The commissioner may by regulation require licensees to file
at such times as he may specify such information as the commissioner
may reasonably require regarding any changes in the information
provided in any application filed pursuant to this division.
Upon reasonable notice and opportunity to be heard, the
commissioner may deny the application for the license for any of the
(a) A false statement of a material fact has been made in the
application for license.
(b) Any officer, director, or member of the applicant has, within
the last 10 years, been (1) convicted of or pleaded nolo contendere
to a crime, or (2) committed any act involving dishonesty, fraud, or
deceit, which crime or act is substantially related to the
qualifications, functions, or duties of a person engaged in business
in accordance with the provisions of this division.
(c) The applicant, any officer, director, general partner, or
member of the applicant, or any person owning or controlling,
directly or indirectly, 10 percent or more of the outstanding
interests or equity securities of the applicant has violated any
provision of this division or the rules thereunder or any similar
regulatory scheme of the State of California or a foreign
(d) The applicant has not complied with all the applicable
provisions of this division.
(e) The proposed officers and directors do not have sufficient
check selling, bill paying, prorating, or other experience to afford
reasonable promise of successful operation.
(f) The plan of business does not demonstrate that the proposed
business will have a reasonable chance for a successful operation.
(g) The proposed business is being formed for a purpose other than
the legitimate objectives contemplated by this division.
(h) The proposed capital structure is inadequate.
The commissioner may require a licensee, in addition to the
bond provided in Section 12206, to obtain an adequate fidelity bond
for each officer, employee, agent, or any person having access to
funds collected by or for the licensee or having authority to draw
against such funds if in the commissioner's opinion such a bond is
necessary for the protection of the public. The bond shall be for the
protection of the public against loss suffered through embezzlement
by any person having access to funds collected by or for the licensee
or having authority to draw against such funds, or from mysterious
disappearance, theft, holdup or burglary. A deposit given instead of
the bond required by this section shall not be deemed an asset of the
licensee for the purpose of complying with Section 12205.
The commissioner may issue a duplicate of a license that has
been lost, stolen, or destroyed, or for a certificate which the
licensee desires to replace, upon satisfactory proof of such loss,
theft, or destruction, or upon surrender of a certificate for
replacement and the payment of a fee of two dollars ($2).