Armed service members: consumer loans.

(1) Existing federal law, the Military Lending Act, prohibits a creditor who extends consumer credit to a covered member of the Armed Forces or a dependent of such a member from requiring that member or dependent to pay interest with respect to the extension of such credit, unless an exception to that rule applies. The federal act also requires a creditor to satisfy other terms and conditions before extending consumer credit to a covered member, and to comply with mandatory disclosure requirements, as specified. Any person who violates the federal act is subject to both criminal and civil penalties. Existing law, the Banking Law, prescribes the conditions pursuant to which a state-chartered bank may engage in the practice of banking. The California Credit Union Law provides for the regulation of credit unions within the state by the Commissioner of Business Oversight. Existing law imposes both criminal and civil penalties for violations of the Banking Law and the California Credit Union Law. Existing law requires a state-chartered bank or a credit union when making or extending a refund anticipation loan to comply with the provision of the John Warner National Defense Authorization Act for Fiscal Year 2007 that added the Military Lending Act. Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight. Existing law, the California Deferred Deposit Transaction Law, provides for the licensure and regulation by the commissioner of persons engaged in the business of making or arranging deferred deposit transactions. A willful violation of either the California Finance Lenders Law or the California Deferred Deposit Transaction Law is a crime. Existing law makes it unlawful under the California Finance Lenders Law and the California Deferred Deposit Transaction Law to violate the provision of the John Warner National Defense Authorization Act for Fiscal Year 2007 that added the Military Lending Act. This bill would amend the laws described above to update the references to the Military Lending Act in order to incorporate amendments to that act, and its applicable regulations. (2) Existing law provides that any person who violates specified provisions prohibiting discrimination against a member of the military or naval forces of this state or the United States, including discrimination with respect to the terms of a loan or financing based on that person's membership in the military or naval forces of this state or of the United States, is guilty of a misdemeanor. Existing law exempts from the discrimination provisions, with respect to loans and transactions covered by the section of the John Warner National Defense Authorization Act for Fiscal Year 2007 that added the Military Lending Act, any person who does not market or extend consumer loans to specified covered borrowers, and any person who does not market deferred deposit transactions to, or enter into such transactions with, specified covered borrowers. This bill would update the references to the Military Lending Act in order to incorporate amendments to that act, and its applicable regulations. (3) This bill would incorporate additional changes to Section 394 of the Military and Veterans Code proposed by AB 1710 to be operative only if this bill and AB 1710 are enacted and this bill is enacted last. (4) Because this bill amends state statutes, the violation of which is a misdemeanor, to include references to an updated federal statute, this bill would expand the scope of existing crimes, thereby imposing a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.