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The California exemptions to UETA take three forms:
First, there is a general exemption for all statutes that require
that "specifically identifiable text or disclosures in a record or a
portion of a record be separately signed, including initialed, from
the record."
Second, there is a special rule for statutes requiring notices of
cancellation. While not technically an exemption, this special rule
restricts the application of UETA so that a notice of the right to
cancel can't be delivered electronically unless the right to cancel
can be exercised electronically.
Third, there is a list of specific statutes. The statutes are
listed in the bill text. The remainder of this document describes
statutes that Consumers Union sought to have exempted, and which were
exempted. We believed that the purpose of the statutory requirements
for a written notice to the consumer would not be equally well
satisfied by sending only an electronic notice.
1. Statutes requiring notice of disposition, eviction,
repossession, and balloon payments:
California's loan statutes contain two kinds of notice
requirements: 1) notices that must be contained in the initial
contract and 2) notices that must be provided at the time of or
following repossession or other action to foreclose on the security.
A broad variety of disclosure requirements for initial contracts were
not exempted. However, post-default notices present a different
issue. There will be far fewer of these notices. They serve a special
notice function, and they often inform consumers that their legal
rights will be affected by the next step taken by the other party or
by a failure to respond to the notice. Certain kinds of post-contract
notices, including notices of intent to dispose of collateral, were
exempted from SB 820, California's UETA.
Civil Code section 2983.2, Rees-Levering notice of intent
to dispose of a repossessed or surrendered motor vehicle.
Civil Code section 2963, balloon payment notice.
Civil Code section 2987, notice of disposition of leased
vehicle to lessee and guarantor after early termination by the
lessee.
Civil Code section 2924i, balloon payment notice.
Civil Code section 2924j, foreclosure.
Civil Code section 2924.3, collection on mortgage by
agent.
Civil Code section 3071.5, signed release of an interest in
a vehicle subject to a lien. Because this is a permanent release and
relinquishment of a property interest, it should not be satisfied by
an electronic click that other documents have defined to equal a
signature.
Civil Code sections 1950.5(f) and (g)(1), requirement for
landlord to provide a written accounting of disposition of security
deposit.
Financial Code section 22328, post repossession,
predisposition notice to all persons liable on a loan secured by a
motor vehicle lien. Includes notice of right to redeem notice of
conditional right to reinstate loan.
Civil Code section 1812.2, 1812.3, retail installment
accounts, predisposition notice. Ten day predisposition notice of
intent to resell or retain goods financed under a retail installment
account. Includes notice of right to redeem.
Public Utilities Code sections 779.1, 10010.1, and 16482,
utility shutoff
These provisions allow utilities to notify customers by mail that
their services will be shut off or discontinued, first at least 10
days prior to the proposed termination, and then within 24-48 hours
of termination. The provisions include notification to a third party
designated by customers 65 years of age or older. Electronic mail is
not yet reliable enough in its delivery for these notices. Further,
the definition of receipt in the UETA is not certain enough to assure
actual receipt for it to apply to these provisions.
Code of Civil Procedure section 1162, This section is cited
in the various eviction codes. It requires mailed notice to augment
posting or to augment personal delivery to a person other than the
addressee. A variety of eviction-related statutes require of notice
in the manner prescribed by Section 1162 of the Code of Civil
Procedure. See e.g. Civil Code Sections 799.65 and 827. The following
was added to California's UETA:
An electronic record may not be substituted for any notice that is
required to be sent pursuant to Code of Civil Procedure Section
1162.
Civil Code sections 1789.14, 1789.16, Credit Services
Organization Statute.
California's statute on credit service organizations severely
restricts the activities of these agencies. The requirement for a
written contract and the requirement for a physical tear-off notice
of cancellation form are very important to the operation of the
statute. For this reason, this statute was exempted from SB 820.
Civil Code section 1789.33, requirement of a written
agreement for deferred deposit check cashing, ("payday loans"). The
Civil Code Section requirement for a written agreement including a
statement of the amount of the APR which is signed by the customer
cannot be satisfied by an electronic click definition of a signature.
One important purpose of the signature in this Civil Code requirement
is to bring to the attention of customer the extraordinary APR
associated with these loans. In California, the average annual
percentage rate on a payday loan covered by Civil Code Section
1789.33 is several hundred percent.
Insurance Code sections 10197, 10199.44,10199.46, and 10253.16,
10509.4, 10509.7, insurance replacement warnings.
Insurance replacement has been a longstanding problem.
Salespersons sometimes induce consumers to purchase a new policy when
the customer would be better off with the old policy, usually because
of new time periods for contestability or preexisting condition
restrictions. The Insurance Code addresses this issue by requiring a
particular mailed notice to the consumer by the insurer, and in some
cases the selling agent, when the seller is aware that an insurance
replacement is occurring. The special warning and notice function of
these notices is not equally well served by an email notice, and the
need to receive them requires at least the level of reliability
provided by regular mail. In addition, some of these provisions
require a signature, which has a special notice function that may not
be equally well served by an electronic click.
2. Notices where nonresponse creates a legal obligation or
conclusive presumption, or the notice has a serious and immediate
effect
Insurance Code sections 10083, 10086, 10087, CEA offers.
These code sections require mailed notices related to the offer of
earthquake insurance coverage. Each defines nonresponse by the
consumer as a conclusive presumption of a rejection of the offer of
coverage. Because nonresponse has binding consequences, the method of
delivery and likelihood of receipt should be at least as reliable as
regular mail. Electronic mail does not yet meet that standard.
Insurance Code sections 11624.09 and 11624.1, mailed notice
of defect in certificate of eligibility or application for assigned
risk plan. If the consumer doesn't respond to these mailed notices
within ten days, the assigned risk insurance policy is void from its
inception. Electronic mail is not yet reliable enough in its
delivery, and the definition of receipt in UETA is not certain enough
to assure actual receipt, for it to apply to these provisions.
Health and Safety Code section 1368.1, plan denying
coverage to an enrollee with a terminal illness must provide enrollee
with certain information within 5 business days (i.e. reasons for
denying coverage, alternate treatment programs, etc.). Electronic
mail is not yet reliable enough in its delivery for this to be the
only means of delivering this information; and the definition of
receipt in the UETA is not certain enough to assure actual receipt
for it to apply to this provision.
Health and Safety Code section 1358.15(a), A plan supplementing
Medicare must notify recipients 30 days prior to any modifications to
Medicare supplement contracts.
Civil Code Sections 1803.7, 2984.3, and 2986.4, These provisions create a presumption that the consumer received a copy of a contract and any credit statement for a retail installment contract (1803.7), vehicle purchase (2984.3), or a vehicle lease (2986.4) if the consumer does not indicate within 30 days that he or she was not furnished with a copy of those documents. Again, electronic mail is not yet reliable enough in its delivery, and the definition of receipt in SB 820 is not certain enough to assure actual receipt for it to apply to these provisions.
3. Insurer cancellation and lapse notices
Health and Safety Code section 1365(a)(1), Health plans may
cancel enrollment or subscription within 15 days after a subscriber
has been duly notified of failure to pay a charge.
Insurance Code section 10235.40, lapse notice for long term
care insurance.
Insurance Code section 662, cancellation of auto
insurance.
Insurance Code section 663, nonrenewal of auto insurance
(electronic delivery to the lienholder, but not to the consumer, is
specifically permitted by the Insurance Code for this notice.)
Insurance Code sections 663 and 664, 667.5, notice of
policy expiration and proof of mailing.
Insurance Code section 673 and Financial Code section
18608(b), notice by lender to insured of intent to cancel auto
insurance for nonpayment of financed premium.
Insurance Code section 677, cancellation of homeowners
insurance and certain other types of insurance.
Insurance Code section 678, nonrenewal of homeowners
insurance.
Insurance Code sections 786, 10127.9, 10127.7, and 10127.10,
notices of right to cancel insurance policy. The Insurance Code
contains a host of right to cancel provisions. They are not proposed
for exemption only because we have made a more general proposal on
the treatment of right to cancel provisions. See, e.g., Insurance
Code sections 786, disability insurance; 10127.9, individual life
insurance; 10127.7, small dollar life insurance policies, and
10127.10, life insurance and annuities.
4. Special Notice rules
Civil Code section 2937, notice of transfer of mortgage
servicing. This section mandates that a borrower be given written
notice on transfer of the servicing of a mortgage or deed of trust
for one to four residential units. The statement of purposes to this
section states that borrowers have a right to know when servicing has
been transferred and that notification may protect the borrower from
fraud and ensure timely payments. Given the present inconsistencies
in the reliability of email notice, and the possibility of a transfer
of servicing some years after the mortgage was first originated, this
statutory purpose may not be satisfied by substituting electronic
notice.
Civil Code section 56.11, authorization to release medical
information.
Civil Code section 56.17, written and signed authorization
for disclosure of genetic test results to third parties.
Civil Code section 798.14, mobile home park notices. This
section requires that notices required under the mobile home chapter
of Civil Code need to be delivered personally to the homeowner or
deposited in the U.S. mail at the address of the site within the
mobile home park. The types of notices that must be given include
notice of a meeting to discuss proposed changes in park rules, notice
of change in zoning, advance notice of interruption in utility
service, notice of proposed changes in fees, and a letter of
intention to sell the park.
Civil Code section 1133, notice of blanket encumbrance to
be signed by the buyer.
Civil Code section 1134, written statement of substantial
defects in condominium or cooperative. Delivery by mail triggers a
five day right to terminate agreement to purchase.
Civil Code sections 1350-1376, the condominium law. These
sections contain extensive requirements for specific written notices
of various types under the Davis-Stirling Common Development Act.
Vehicle Code section 9975, correction of safety defects.
The maker of a car is not liable under this section for the cost of
correcting defects if correction is not sought within 45 days after
receipt of notification or the end of the warranty. Because failure
to act in after receipt of notice has legal consequences, this
section was exempted.
Civil Code section 1793.23, notice of lemon law buyback or
voluntary repurchase of problem vehicle. This section requires that
any person who sells a lemon law buyback car to a new buyer must
obtain a signed disclosure statement from the potential buyer before
the sale. This is the kind of signature requirement where a real
(handwritten) signature should be required.
Civil Code sections 1917.712 and 1917.713, disclosures
about shared appreciation loans for seniors.
Health and Safety Code section 1368.01, health care
grievance. Plan must resolve a grievance within 30 days of receipt of
the grievance, or respond to subscribers and enrollees with a written
statement on the disposition or pending status of a grievance within
30 days of receipt of the grievance.
Health and Safety Code section 1371, health care denial.
Health plan must reimburse within 30 days of receipt of a claim (45
days for HMOs), or interest accrues. If the claim is contested, the
subscriber must be notified in writing that the claim is contested or
denied within 30 days of receipt of the claim (45 days for HMOs).
5. Additional statutes
Unruh Retail Credit Act and Rees-Levering Conditional Auto Sales
Act
Civil Code section 1720, If an obligor sends an inquiry via
certified mail to an obligee concerning any debit or credit
applicable to a retail installment account obligation, the obligee
must respond in a writing sent to the last known address of the
obligor within 60 days from the date the inquiry was mailed.
Civil Code section 1785.15(b)(2), A consumer has the right
to make a written request for information from a consumer credit
reporting agency, and the agency has to send the information within 5
days after the request has been received.
Civil Code section 1806.2, Upon the written request of the
buyer, the holder of a contract shall "give or forward" a written
statement of the unpaid balance.
Civil Code section 1806.4, Upon the written request of the
buyer, the holder of a contract shall deliver, or mail acknowledgment
of payment in full.
Civil Code Section 1810.11, If the buyer makes a written
request for a statement of finance charges assessed on the account in
the preceding year, the seller shall provide the information in
writing.
Civil Code Section 1861.24, If judgment isn't paid 30 days
after it becomes final, a tenant's or guest's baggage and property
may be sold. The notice of sale shall be posted and mailed to the
tenant or guest at least 15 days prior to the date of the sale.
Civil Code Section 1862.5, Unclaimed property left in a
hospital may sold four weeks from the time that written notice of the
sale is given to the last known owner.
Civil Code Section 1983, A former tenant's or owner's
personal property may be disposed of not less than 18 days after
notice is mailed.
Civil Code Section 2941, After a mortgage has been
satisfied, and upon the written request of the consumer, the lender
shall deliver the original note and mortgage or deed of trust.
Health & Safety Code Section 18035.5(a), Upon the
written demand of the registered owner of a manufactured home,
mobilehome, or commercial coach, the secured party shall deliver a
copy of the conditional sale contract or the promissory note and
security agreement, and a written statement indicating the amount of
the unpaid balance, among other things.
Insurance Code Section 657, Upon a consumer's written
request, an insurance agent who refuses to accept or to issue a
policy shall furnish the applicant with a written statement
explaining the reason for refusal within 30 days of receipt of the
request.
Insurance Code Section 658, An insurer who refuses to
accept or to issue a good driver discount policy when a written
application has been made by a qualified applicant shall furnish the
applicant with a written statement explaining the reason for refusal
within ten days of the refusal.
Insurance Code Section 664, Proof of mailing is sufficient
proof of notification of cancellation or of intention not to renew an
insurance policy.
Insurance Code Section 666, Where notification of
cancellation does not include the reason for cancellation, upon a
consumer's written request, the insurer shall mail or deliver the
reason for cancellation within five days of receipt of the
request.
Insurance Code Section 678.1(g), Upon the written request
of an insured who has received a notice of nonrenewal, the insurer
shall provide a report on the account within 15 days of receiving the
request.
Insurance Code Section 10102, Upon issuance or renewal of a
residential property insurance policy, the insured must be provided
with a disclosure statement. The statement can be mailed, with
first-class mail as adequate proof of mailing. If the applicant does
not return a signed acknowledgement of receipt of the disclosure
within 60 days of the date it was provided, then there is a
conclusive presumption that the insurer complied with the disclosure
requirement.
Insurance Code Section 10113.7, The insurer must deliver or
mail written notice of an increase in the premium of a life insurance
policy to the policyholder 20 days before the increase becomes
effective.
Insurance Code Section 10235.16, The insured shall be
furnished with a notice of replacement of accident and sickness or
long-term care coverage.
Prepared by:
Gail Hillebrand
Consumers Union
West Coast Regional Office
1535 Mission St.
San Francisco, CA 94103
(415) 431-6747
hillga@consumer.org
Consumers Union's West Coast
Regional Office
(January 2000)
Additional documents and corresponding links:
"Uniform Electronic Transactions Act: Consumer
Nightmare or Opportunity?"
Http://www.consumersunion.org/finance/899nclcws.htm
"Uniform Electronic Transactions Act: Proposed amendments to protect
consumers"
Http://www.consumersunion.org/finance/uetaws899.htm
