The California governor signed SB 633 last year in August. And effective from Jan 1st, 23, it obligates creditors to give a cosigner notice when they get more than one person’s signature on a consumer credit card. This also includes loans, retail installment contracts, and other credit extensions.
Moreover, it also increases the number of languages in which said notice must be provided, allowing consumers to be notified in languages other than English and mandating the state to offer translations.
These new Notice to Cosigner specifications for consumer credit agreements also require that a Notice be given to any married couple where one spouse signs a consumer credit contract but the other does not obtain any of the funds as a result of the agreement.
The Details Of The Amendment
Before a person becomes bound as a cosigner on any consumer credit transaction or motor vehicle lease, the new statute mandates that they get a notice in four languages other than English.
A model notice in English and Spanish was previously provided in the statute. But this was removed from the Act, and the California Department of Financial Protection and Innovation was made responsible for drafting model notices in Spanish, Tagalog, Chinese, Vietnamese, and Korean.
“Consumer credit contracts” are agreements to pay money on a deferred payment basis for the money, goods, services, or other consideration given mainly for family, household, or personal purposes. And the accompanying notice requirement applies to a wide range of contracts and leases, including:
- Installment contracts and accounts under the Unruh Act,
- Restrictive sales contracts, as outlined by the Automobile Sales Finance Act
- Loans or credit lines that are used mainly for personal, family, or domestic needs and are either unsecured or secured by anything other than real estate
- Loans or credit lines that are used for family, household, or personal purposes and governed by either the California Financing Law or the Real Estate Law, both of which are found in the Financial Code, whether or not they are secured by real property.
- Leases for vehicles as outlined by the Motor Vehicle Leasing Act (There is an explicit exclusion for joint applicants applying for open-end credit as described in Regulation Z.)
The modified Act now mandates that independent of the language in which the contract was initially negotiated, the cosigner notice is given in all six languages in which there are model notices, expanding the notification requirement to various consumer contracts and leases.
However, if the agreement or lease is drafted in a language other than English and that language does not have a model notice, the cosigner notice must be issued in both English and that other language.
How Is The Amendment Different From The Previous Law?
Previously, unless the cosigners were married to each other, the creditor had to give notice to each cosigner. Additionally, both English and Spanish versions of the cosigner notification had to be submitted. The warning could be contained in the contract’s language or a separate sheet.
But after the amendments made by SB 633, notice must now be provided to all cosigners on the agreement, regardless of whether or not they are wedded to one another. The notice must also be given in any of the languages listed in Section 1632(b) of the California Civil Code (i.e., Chinese, Spanish, Tagalog, Korean, Vietnamese).
Additionally, the notice needs to meet these conditions:
- Nothing may be included in the statement other than the name of the creditor and the contract number or the lessor’s name and the lease number to which the statement pertains.
- The date and signature of acknowledgment of receipt must be included.
- This document must be included with and serve as a preamble to the consumer credit contract. The wording of the notification has also been changed by SB 633; the header is now required to be clear and conspicuous, and it is necessary to be written in a typeface no smaller than 10 points.
A notice that complies with federal law and regulations (such as the Federal Trade Commission’s Credit Practices Rule cosigner notification) and is translated into the relevant languages will be considered in compliance with the California notice.
The bill further mandates that the notice be linked to the consumer credit contract and contain the date and a confirmation of receipt.
These notices, translated from the DFPI website, may be used by lenders to fulfill the notice requirement for cosigners. Thus, before January 1, 2019, any business providing a consumer credit contract in California must examine and execute the translated cosigner notification.
Creditors should rely on the bill’s wording to identify how to execute the translations, as the DFPI did not offer any supplementary information to accompany the translations. They can find the appropriate translations on the Department of Financial Protection and Innovation (Department) website.
The cosigner notice must also be given to the customer separately, be dated and signed by them, be annexed to the consumer credit agreement or lease, and come before it. A claim to enforce the contract or lease can now be defended affirmatively if the required cosigner notice was not given.
Need A Certified Translation To Support Your Cosigner Notice Requirement?
With this new change, you are no longer exempt from providing an official translation of the cosigner notification issued in a foreign language. No matter how well-versed you are in a language, interpreting official documents with intricate jargon can be challenging.
At Translation Source, we are entirely aware of the challenges of this amendment and many others, and we make sure to have qualified translators on hand to assist. We can offer legally binding certified, sworn, notarized, and legalized translations.
Get in touch with us to learn more about our service.
