California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 3 - Commercial Financing Disclosures › Section 901 - General Requirements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				Disclosures provided in accordance with sections
				22800 through
				22804 of the code shall comply
				with the following requirements.
(1) At the
				top of the disclosure, centered on the page or other display medium, the
				provider shall print "OFFER SUMMARY -" in bold font, followed by a one- to
				five-word description of the type of product offered (e.g., "Merchant Cash
				Advance") which may include the financer's branding terminology.
(2) For any disclosure required to comply
				with section
				920, subdivision (a), at the
				bottom of the disclosure, below any other information required by this
				subchapter, the provider shall print the following statement: "Applicable law
				requires this information to be provided to you to help you make an informed
				decision. By signing below, you are confirming that you received this
				information." Below the statement, the provider shall include a space for the
				recipient to sign the form labeled "Recipient Signature" and a space for the
				recipient to write the date of their signature, labeled "Date."
(3) For any disclosure other than a
				disclosure required to comply with section
				920, subdivision (a), at the
				bottom of the disclosure, below any other information required by this
				subchapter, the provider shall include the following statement: "Applicable law
				requires this information to be provided to you to help you make an informed
				decision."
(4) If the term or
				estimated term of a transaction is:
(A) One
				year or less, the term or estimated term shall be disclosed in days;
(B) Greater than one year, the term or
				estimated term shall be disclosed in units of years and months, with any
				remaining days expressed as a portion of a month to the nearest two decimal
				points.
(5) The annual
				percentage rate shall be expressed to the nearest ten basis points. For
				example: "10.45%."
(6) The
				disclosures shall be presented to the recipient as a separate document from any
				other contract, agreement, or other disclosure document provided to the
				recipient, but may be mailed or transmitted in a package that contains other
				documents.
(7) Fonts
(A) The provider may present the required
				disclosure in fonts and colors that are clear, complete, conspicuous, easy to
				compare with other disclosures, and consistent with the requirements of this
				subchapter. A provider shall not use colors and fonts that make any enumerated
				terms required by section
				22802, subdivision (b), of the
				code more clear or conspicuous than any other term required by that
				subdivision.
(B) A provider shall
				use fonts for the disclosures substantially similar in size to:
(i) Times New Roman 12- to 14-point font, for
				information appearing in the first and second columns where those columns are
				not combined with other columns.
(ii) Times New Roman 10- to 12-point font,
				for information appearing in the third column, information appearing in cells
				where the second and third columns are combined, and information appearing in
				cells where the first, second, and third columns are combined.
(iii) Times New Roman 16-point font for the
				content required by subdivision (a)(1) of this section.
(C) Notwithstanding subdivision (a)(7)(B), a
				provider may use a font substantially similar in size to Times New Roman
				16-point font for "OFFER SUMMARY -" and content appearing in the first and
				second columns of the disclosure where those columns are not combined with
				other columns.
(D) A provider may
				deviate from the font requirements described in subdivisions (a)(7)(B) and (C)
				if the provider makes a good faith determination that deviating from the
				standards is necessary:
(i) To comply with the
				Americans with Disabilities Act (42 U.S.C. §
													12101 et seq.);
				or
(ii) For clarity based upon the
				medium (e.g., mobile device) in which the disclosure will be
				presented.
(8)
				A provider shall ensure that the width of the columns in the required
				disclosure is such that the disclosure does not unnecessarily extend onto
				multiple pages. A provider that formats the columns in the required disclosure
				such that the ratio between the first, second and third columns is 3:3:7
				complies with the requirements of this subdivision.
(9) Where a provider is required or permitted
				to provide a "short explanation" under this subchapter, the provider shall
				provide an explanation of not more than 60 words.
(10) Each of the cells in the required
				disclosures shall be outlined.
(11)
				If disclosures are provided to a recipient electronically, the provider shall
				include a method for the recipient to submit an electronic signature that
				complies with Civil Code section
				1633.2,
				subdivision (h), and automatic date stamp to comply with subdivision (a)(2) of
				this section and provide the recipient with the ability to receive a copy of
				the disclosure in a format that the recipient may keep. A format the recipient
				may keep includes hard copy disclosures, and electronic documents containing
				the required disclosures that the customer can save indefinitely for future
				reference.
(12) Except with respect
				to sales-based financing, if a provider must make estimates or assumptions to
				provide any disclosure required by this chapter, the provider shall:
(A) Base those estimates or assumptions on
				the best information reasonably available to the provider at the time of the
				disclosure;
(B) State clearly that
				any disclosure based upon an estimate or assumption is an estimate by adding
				the word "estimate" to the descriptive language of any required disclosure
				under this chapter; and
(C) State
				clearly any assumptions or estimates used as the basis for the disclosure in
				any explanation or description associated with the
				disclosure.
(13) When
				making the disclosures required by this subchapter, for transactions where the
				applicable interest rate adjusts over time and the interest rate applicable for
				the entire term of the transaction cannot be calculated in advance, the
				provider shall assume that the applicable interest rate is the initial interest
				rate for any period when the interest rate cannot be calculated in
				advance.
(14) Numerical values,
				including but not limited to percentages, dates, and dollar amounts, shall be
				expressed numerically, such as "23" and not alphabetically, such as
				"twenty-three."
(15) If a provider
				issues a disclosure where the amount financed includes funds used to pay down
				or pay off other amounts owed by the recipient that may change over time, and
				the amount due in connection with those amounts owed changes prior to
				consummation of the agreement between the financer and the recipient, the
				provider need not provide a new disclosure to the recipient solely because the
				amount due in connection with those amounts owed has changed.
(16) A provider may disregard the effects of
				the following in making calculations and disclosures:
(A) That payments must be collected in whole
				cents.
(B) That dates of scheduled
				payments and advances may be changed because the scheduled date is not a
				business day.
(C) That months have
				different numbers of days.
(D) The
				occurrence of leap years.
(17) Notwithstanding subparagraph (a)(16)(A),
				any dollar amount disclosed to a recipient shall not be disclosed using
				fractions of a cent (ex. $4.025 or $4.02 and ½
				cents).