AB 909 California Assembly · 2025-2026 Regular Session

Financial abuse of an elder or dependent adult: fraudulent transactions: liability.

Summary

Existing law, the Uniform Commercial Code (UCC) , provides that, unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement the UCC. Existing law generally regulates fund transfers, including by prescribing rules applicable to a transfer pursuant to a security procedure for the detection of error to a beneficiary not intended by the sender. This bill would similarly specify that those fund transfer provisions do not displace those principles of law and equity. Existing law requires all officers and employees of a financial institution to report known or suspected instances of financial abuse of an elder or dependent adult, as specified. Existing law imposes a civil penalty for violation of this prohibition in an amount not exceeding $1,000 or, if the failure to report is willful, a civil penalty not exceeding $5,000, as specified. This bill would increase those civil penalties to $10,000 and $50,000, respectively, and would additionally authorize an elder or dependent adult who suffers financial abuse because of the noncompliance to recover those civil penalties. This bill would also enact various provisions related to protecting a victim of abuse of an elder or dependent adult with respect to a fraudulently induced transaction, defined as an "injured consumer," including by limiting the liability of an injured consumer for a fraudulently induced transaction to the lesser of $50 or the amount of money or value of property or services obtained in the fraudulently induced transaction before the financial institution has notice that, or a reasonable basis to believe that, a fraudulently induced transaction involving the injured consumer's account has been, or may be, effected, as prescribed. This bill would also require a financial institution that, within 60 days of transmitting to a consumer certain required documentation related to the consumer's account, receives oral or written notice in which the consumer, among other things, indicates the consumer's belief that the consumer is an injured consumer, to investigate, as prescribed, the alleged reasons and determine whether the consumer is an injured consumer within 10 business days. This bill would authorize an injured consumer to bring a civil action against a noncompliant financial institution, as prescribed.

Bill status failed 1 of 4 stages cleared

Introduction

Feb 2025

Committee Review

Floor Vote

Governor

Introduced Feb 19, 2025 Last action Feb 2, 2026

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What changed between versions

02/19/25 - Introduced → 03/28/25 - Amended Assembly · 13 edits · Mar 28, 2025

MAJOR

AB 909 was dramatically expanded from a nonsubstantive cleanup of elder financial abuse reporting provisions into a comprehensive fraud protection package. The amended bill adds an entirely new chapter to the Commercial Code limiting injured consumers' liability for fraudulently induced transactions to $50, creates investigation and reimbursement obligations for financial institutions, establishes civil remedies including treble damages, defines 'coerced debt' protections in the Civil Code, and increases reporting penalties tenfold. This transforms the bill from a technical fix into major new consumer protection legislation targeting elder and dependent adult fraud.

Scope change

The bill expanded from a single nonsubstantive amendment to one Welfare and Institutions Code section into a multi-code legislative package spanning the Civil Code, Commercial Code, Financial Code, and Welfare and Institutions Code. It now creates an entirely new regulatory framework for fraudulently induced transactions involving elders and dependent adults, adds coerced debt protections, and significantly strengthens enforcement mechanisms.

SCOPE

Added an entirely new Chapter 6 (Sections 11600-11606) to Division 11 of the Commercial Code titled 'Fraudulent Transfers,' creating a comprehensive framework for protecting elders and dependent adults from fraudulently induced financial transactions.

Added Section 11109 to the Commercial Code clarifying that Division 11 (fund transfers) does not displace principles of law and equity including fraud, duress, coercion, and other validating or invalidating causes.

REQUIREMENT

Limits an injured consumer's liability for a fraudulently induced transaction to the lesser of $50 or the amount obtained before the financial institution had notice or reasonable basis to believe a fraudulent transaction was being effected. Liability can exceed this only if the consumer failed to report within 60 days of receiving a periodic statement showing the transaction.

Requires financial institutions to investigate alleged fraudulently induced transactions within 10 business days of receiving notice, reimburse confirmed injured consumers within one business day of determination, and optionally provisionally recredit accounts within 10 business days with investigation concluding within 45 days.

Requires financial institutions to disclose in periodic statements, in readily understandable language, the consumer's liability for fraudulently induced transactions and the telephone number and address of the person or office to notify if the consumer believes a fraudulent transaction has been effected.

ENFORCEMENT

Authorizes injured consumers to bring civil actions against noncompliant financial institutions for actual damages, treble damages (if the institution failed to provisionally recredit and did not conduct a good faith investigation, or knowingly and willfully reached an unreasonable conclusion), statutory damages of $100 to $1,000 per individual action, and attorney's fees. Class actions are capped at the lesser of $500,000 or 1 percent of the defendant's net worth.

Provides that a person who receives proceeds of a fraudulently induced transaction and knows or should know of its fraudulent nature is liable to the reimbursing institution. Financial institutions receiving such proceeds are jointly and severally liable for half the reimbursed amount.

Added a new provision allowing an elder or dependent adult who suffers financial abuse because of a mandated reporter's failure to report to directly recover the civil penalty and remedies under Section 15657.5, rather than limiting recovery to actions by the Attorney General, district attorney, or county counsel.

Provides that in a debt collection action, an injured consumer may raise their status as a defense to offset the debt. If the plaintiff had notice the defendant was an injured consumer before filing suit, the plaintiff is liable for treble damages and attorney's fees. Notice is imputed to subsequent debt buyers and collectors.

Amended Section 90003 of the Financial Code to deem a violation of the new Fraudulent Transfers chapter an unlawful, unfair, deceptive, or abusive act or practice with respect to consumer financial products or services, bringing it under the Department of Financial Protection and Innovation's enforcement authority.

DEFINITION

Added Section 1798.97.1 to the Civil Code defining 'coerced debt' as debt incurred by a victim of domestic violence, elder or dependent adult abuse, or a foster youth through duress, intimidation, threat of force, force, fraud, or undue influence. Also defines adequate documentation (police reports, FTC identity theft reports, court orders, sworn certifications from qualified professionals) and lists ten categories of qualified third-party professionals who can certify coerced debt.

FISCAL

Increased civil penalties for failure to report financial abuse from $1,000 (general) and $5,000 (willful) to $10,000 and $50,000 respectively - a tenfold increase.

TECHNICAL

Made gender-neutral pronoun changes throughout Section 15630.1 (changing 'his or her' to 'their') and changed 'Internet' to 'internet' in one instance.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

Feb 2, 2026

Lower · Passed

From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

lower

Apr 1, 2025

Committee

Re-referred to Com. on B. & F.

lower

Mar 28, 2025

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on B.&F. Read second time and amended.

lower

Mar 28, 2025

Committee

Referred to Coms. on B.&F. and JUD.

lower

Feb 20, 2025

Lower · Passed

From printer. May be heard in committee March 22.

lower

1 primary · 0 co-sponsors