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§ 912. Factoring Disclosure Formatting and Contents.

10 CA ADC § 912Barclays Official California Code of RegulationsEffective: December 9, 2022

Barclays California Code of Regulations
Title 10. Investment
Chapter 3. Commissioner of Financial Protection and Innovation (Refs & Annos)
Subchapter 3. Commercial Financing Disclosures.
Effective: December 9, 2022
10 CCR § 912
§ 912. Factoring Disclosure Formatting and Contents.
(a) Disclosures for factoring transactions provided in accordance with section 22802 of the code shall comply with the following requirements.
(1) The provider shall present the required disclosures in a table consisting of six rows and three columns.
(2) The first row of the table shall include only the following information:
(A) In the first column: “Funding Provided”.
(B) In the second column, the amount financed.
(C) In the third column, in the order listed and in one paragraph:
(i) “This is how much [name of financer] will pay when you assign [description of legally enforceable claim, e.g., “the invoice”] to [name of financer].”
(ii) If the amount financed is greater than the recipient funds: “Due to deductions or payments to others, the total funds that will be provided to you directly is [recipient funds]. For more information on what amounts will be deducted, please review the attached document “Itemization of Amount Financed.””
(iii) If any portion of the amount financed will be used to pay down or pay off other amounts owed by the recipient that may change over time, and the amounts owed are known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change if the amount owed for the recipient's other obligations changes.
(iv) If, as a condition of the financing, a recipient's amounts owed to third parties must be paid down or paid off using funds from the amount financed, and an amount owed is not known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change based upon the required disbursements to satisfy other obligations.
(3) The second row of the table shall include only the following information:
(A) In the first column: “Estimated Annual Percentage Rate (APR)”.
(B) In the second column, the estimated annual percentage rate calculated in accordance with sections 940 and 941.
(C) In the third column:
(i) “APR is the estimated cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, fees you pay, and payments made to [name of financer].”
(ii) A short explanation of the assumptions relating to payment timing that the provider used to calculate the estimate. For example: “This estimate assumes the account debtor will pay the invoice on the invoice due date.”
(iii) If no part of the finance charge is based upon an interest rate, in addition to the language required by subdivision (a)(3)(C)(i): “APR it is not an interest rate and the amount of the factoring fee we charge is not based upon an interest rate.”
(4) The third row of the table shall include the following information:
(A) In the first column: “Finance Charge”.
(B) In the second column, the total finance charge calculated in accordance with section 943.
(C) In the third column, the provider's calculation of the finance charge, with the amount and description of each expense that is included in the finance charge.
(5) The fourth row of the table shall include only the following information:
(A) In the first column: “Payment”.
(B) In the second column: “NA” or “N/A” or “Not applicable”.
(C) In the third column, a short explanation describing why the recipient is not ordinarily required to make payments under the contract. For example: “You are selling an invoice to us, so you will not be required to make any payments to us unless your customer fails to pay the invoice and we find that you breached your warranty to us by failing to deliver the invoiced goods to your customer.”
(6) The fifth row of the table shall include only the following information:
(A) In the first column: “Estimated Term”.
(B) In the second column, the term of the transaction.
(C) In the third column, a short explanation describing how the provider calculated the term. For example: “The invoice is due for payment 30 days from today, so we have estimated a term of 1 month. The invoice may be paid sooner or later than the due date.”
(7) The sixth row of the table shall include only the following information:
(A) In the first column: “Repurchase Costs”.
(B) The second and third columns shall be combined, and:
(i) If the recipient is permitted to repurchase the legally enforceable claim for payment before the legally enforceable claim is due and payable, the resulting combined cell shall be divided vertically into two cells by a horizontal line, and:
a. If at any time during the term of the transaction, repurchase of the legally enforceable claim will result in the recipient paying finance charges other than interest since the advance was made, the top cell shall include the following statement: “If you repurchase the [description of legally enforceable claim] before the due date you still must pay all or a portion of the finance charge, which could be as high as $[maximum non-interest finance charge].”
b. In all other cases, the top cell shall include the following statement, “If you repurchase the [description of legally enforceable claim] before the due date you will not pay any portion of the finance charge other than unpaid interest accrued since disbursement.”
c. If, at any time during the term of the transaction, repurchase of the legally enforceable claim will require the recipient to pay additional fees and charges not included in the finance charge, the bottom cell shall include the following statement: “If you repurchase the [description of legally enforceable claim] before the due date, you must pay additional fees and charges that are not part of the finance charge, including [amount and description of fees].”
d. In all other cases, the bottom cell shall state: “If you repurchase the [description of legally enforceable claim] before the due date, you will not be required to pay any additional fees and charges.”
(ii) If the recipient is not permitted to repurchase the legally enforceable claim for payment before the legally enforceable claim is due and payable, the resulting cell shall include the following statements:
a. “You are not permitted to pay the amount due on the [description of legally enforceable claim] before your customer's due date.”
b. If applicable: “The finance charge will not decrease if your customer pays the [description of legally enforceable claim] before the due date.”

Credits

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802, 22803 and 22804, Financial Code.
History
1. New section filed 6-9-2022; operative 12-9-2022 pursuant to Government Code section 11343.4(b)(2) (Register 2022, No. 23). Transmission deadline specified in Government Code section 11346.4(b) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20.
This database is current through 4/5/24 Register 2024, No. 14.
Cal. Admin. Code tit. 10, § 912, 10 CA ADC § 912
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