California Check Sellers, Bill Payers, and Proraters Bond

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California Check Sellers, Bill Payers, and Proraters Bond

The Check Sellers, Bill Payers, and Proraters Law may be found in Division 3 of the California Financial Code, beginning with Section 12000. The rules may be found beginning with Section 1770 of Subchapter 10 of Chapter 3 of Title 10 of the California Code of rules (10 C.C.R. 1770, et seq.). The regulations cover a wide range of topics.

In 1947, the law that would later be known as the Check Sellers and Cashers Law was first passed. Companies and people that sold checks, cashed checks, or paid bills on behalf of others were subject to licensing requirements and regulatory oversight when the law was passed in its original form.

In 1983, the statute was changed so that it no longer required the department to provide licenses to check cashers. This change took effect immediately. Check cashers must seek permission from the Department of Justice in order to legally operate in the United States.

In accordance with the Check Sellers, Bill Payers, and Proraters Law, there are now three distinct categories of enterprises that may get a license.

  1. Check Sellers – A check seller is someone who sells checks, money orders, or drafts to customers so that those customers may transfer money to pay off their debts or fulfill other financial commitments. The vast majority of checks and money orders are sold via agents, who then divide the fee associated with the check with the licensee. The sales of the checks are handled through a network of agents consisting of small marketplaces and check-cashing establishments, for example. It is common practice to acquire a check or money order in order to fulfill a financial obligation that requires the use of the postal system, such as the payment of rent or utility bills. In addition to that, checks must be acquired before money may be sent back to a nation outside of the United States.
  2. Bill Payers – In order to fulfill their role as an agent for an obligor and pay their payments, bill payers are given money. It is compensated monetarily by the obligor for providing this service.
  3. Proraters – People who participate in the business of receiving money or something of worth from a debtor for the purpose of distributing the money or anything of value among creditors as payment or partial payment of the debtor’s obligations are referred to as general proraters. These individuals do this work in exchange for remuneration. On the other hand, special proraters are often business agents or managers who pay the bills of their clients as part of their overall management of their customers’ businesses.

How It Works

Surety Bond-California Check Sellers, Bill Payers, and Proraters Bond-How It Works

The California Check Sellers, Bill Payers, and Proraters Bond will act as a guarantee that the first party will comply with all applicable laws, rules, and regulations. The guarantee will be offered by a third party, known as the surety, to a second party, known as the obligee.

In the event that the first party violates the terms of the bond in any way, the obligee will have the right to submit a claim against the bond. The following are examples of some of the infractions that occurred:

  • The licensee did not take any safeguards that may be considered reasonable to prevent the robbery, break-in, armed robbery, or modification of checks, drafts, or money orders.
  • The money that was given to the licensee was not put into the account that was set up as a trust.
  • The trust responsibilities of the licensee were not being paid for by the licensee.

The claim that was bonded must first be settled by the principal. In the event that the principal is unable to pay the claim, the surety will make the payment on the principal’s behalf. In accordance with the provisions of the bond arrangement, the principal is required to provide reparations to the surety when the claim has been resolved.

Bond Amount

The applicant for a license will have their credit score taken into consideration when the bond amount is determined.

Applicants for the California Check Sellers, Bill Payers, and Proraters Bond who have a good credit history will have a better chance of getting a more affordable bond cost. The initial amount of the bond premium is one percent of the total bond value.

Frequently Asked Questions

Who Must Obtain a License?

Any individual or corporation that wishes to engage in the business of selling checks, drafts, or money orders, or of receiving money as agent of an obligor for the purpose of paying bills, invoices, or accounts of such an obligor, or to accept money in payment of utility bills except as an authorized agent for a utility company, is required to obtain a license from the Department of Financial Protection and Innovation. This license is required in order to engage in any of the aforementioned activities.

Who Is It That This Bond Safeguards?

The applicant for a license will be required to post this bond in order to guarantee that they will comply with the Check Sellers, Bill Payers, and Proraters Law while carrying out their responsibilities. The applicant for a license will also be required to post a bond to guarantee that they will follow the regulations that have been established by the Commissioner of Business Oversight for the state of California.
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