On August 15, 2022, the Governor of California signed SB 633, which expands the requirement for creditors to provide a co-signer notice when obtaining multiple person signatures on a consumer credit agreement. For the purposes of this law, a consumer credit agreement includes, among other things, retail installment agreements, loans or other extensions of credit.[1]
Under current law, a creditor must provide the notice to each person who signs the consumer credit agreement but does not receive any part of the money, goods or services that are the subject of the agreement. (i.e. a co-signer), unless the persons are married to each other. In addition, under current law, the required cosignature notice had to be provided in English and Spanish. The notice could also be on a separate sheet of the contract or in the text of the contract itself.
SB 633 changes existing law by requiring that notice be given to all co-signers of the contract, whether or not the persons are married. The amended law also now requires that the notice now be provided in any language except English, as stated in Cal. Civil. Code § 1632(b) (i.e. Spanish, Chinese, Tagalog, Vietnamese, Korean). The notice must also meet the following requirements:
- It may not contain any other text, except that which is necessary to identify the lender and the consumer credit contract or the lessor and the lease to which the declaration refers;
- It must mention the date and the person’s acknowledgment of receipt; and
- It must be attached to and precede the consumer credit agreement. SB 633 also changes the text of the notice itself by changing the way the header is presented and indicates that it should be clear and visible and in Arial 10 point equivalent.
Additionally, note that this statute provides that if federal law or regulation requires or permits the use of a substantially similar notice (e.g., the FTC Credit Practices Rule Co-Signer Notice), l Use of the Federally Sanctioned Notice translated into the required languages will constitute compliance with the California Notice.
The amended law takes effect on January 1, 2023. By January 1, 2023, the Department of Financial Protection and Innovation (DFPI) will provide translations of the required notices on its website, which may be used to satisfy to the notice requirement. At this time, the California DFPI has not yet released translations of the notice, but we will continue to monitor the DFPI website for information as it becomes available.
[1] A “consumer credit agreement” is defined as any of the following obligations to pay money on a deferred payment basis, where the money, goods, services or other consideration which is the subject of the contract are primarily intended for personal, family, or household purposes, including in the relevant part: (a) Retail installment sales contracts; (b) Retail installment accounts; (3) Conditional sales contracts; (4) Loans or extensions of credit secured by non-real estate, or unsecured, intended to be used primarily for personal, family or household purposes; (5) Loans or extensions of credit to be used primarily for personal, family or household purposes when such loans or extensions of credit are subject to the provisions of [certain enumerated sections], Division 7 (beginning with Section 18000), Division 9 (beginning with Section 22000) (California Financing Law) or Division 10 (beginning with Section 24000) of the Financial Code, whether secured by real property or otherwise ; and (6) Rental Agreements. Cal. Civil. Code § 1799.90(a). “Creditor” means an individual, partnership, corporation, association or other entity, however designated, who enters into or arranges consumer credit agreements in the ordinary course of business. Cal. Civil. Code § 1799.90(b)(definition not modified by SB 633).
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