Section 914 - Sales-Based Financing Disclosure Formatting and Contents(a) Disclosures for all sales-based financing provided in accordance with section 22802 of the code, except for asset-based lending that meets the definition of sales-based financing, shall comply with the following requirements. (1) The provider shall present the required disclosures in a table consisting of nine 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 funding [name of financer] will provide."(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 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 annual percentage rate calculated in accordance with section 940.(C) In the third column: "APR is the estimated cost of your financing expressed as a yearly rate. APR incorporates the amount and timing of the funding you receive, fees you pay, and the periodic payments you make. This calculation assumes your estimated average monthly income through [description of particular payment channel or mechanism] will be [average monthly income estimate determined in accordance with sections 930 or 931] . Since your actual income may vary from our estimate, your effective APR may also vary."
(D) If no part of the finance charge is based upon an interest rate, in addition to the language required by subdivision (a)(3)(C) of this section: "APR is not an interest rate. The cost of this financing is based upon fees charged by [financer] rather than interest that accrues over time."(4) The third row of the table shall include only the following information: (A) In the first column: "Finance Charge".(B) In the second column, the finance charge calculated in accordance with section 943.(C) In the third column: (i) "This is the dollar cost of your financing."(ii) In addition, if the finance charge will not increase under any circumstance if repayment takes longer than estimated, the provider may include the following statement: "Your finance charge will not increase if you take longer to pay off what you owe."(5) The fourth row of the table shall include only the following information: (A) In the first column: "Estimated Total Payment Amount".(B) In the second column, the total dollar amount of estimated payments the recipient will make during the term of the contract.(C) In the third column: "This is the total dollar amount of payments we estimate you will make under the contract."(6) The fifth row of the table shall include only the following information: (A) In the first column: "Estimated Payment".(B) The second and third columns shall be combined, and contain the following information: (i) The average amount of estimated periodic payments calculated in accordance with section 942, followed by a forward slash (/) and the frequency of periodic payments.(ii) The date and amount of any irregular payments listed in chronological order.(iii) The date and amount of any reasonably anticipated true-ups.(7) The sixth row of the table shall include only the following information:(A) In the first column: "Payment Terms".(B) The second and third columns shall be combined, and contain the following information:(i) If the contract provides for daily periodic payments, a short explanation of when daily payments will be required. For example, on weekdays or every calendar day.(ii) If applicable, a short explanation of how the financer will use the split rate to calculate the recipient's required payments and/or that the financing does not have a fixed payment schedule or minimum payments. For example: "Each business day, your credit card processer will remit 15% of your gross receipts to us, and send any remaining amounts to you. This financing does not have a fixed payment schedule and there is no minimum payment amount."(iii) If the contract contains a true-up mechanism, (a) A short explanation of how the provider calculated the pre-set periodic payment(s) described in section 900, subdivision (a)(34)(A). For example: "We based your preset daily payment of $75 upon our estimate of 15% of your total income, based upon average monthly income of $15,000 for the last three months."(b) A short explanation of the true-up mechanism, and a reference to the part of the contract that describes the terms of the true-up mechanism, if available. For example: "You have the right to receive refunds of all or part of your payments if you demonstrate that your payments have exceeded 15% of your total income during any given month. For more details on your rights, see paragraph 5 of your contract."(iv) A short explanation of any minimum payment terms under the contract. For example: "You must pay us a minimum of $2,000 per month under the contract."(8) The seventh row of the table shall include only the following information: (A) In the first column: "Estimated Term".(B) In the second column, the estimated term of the transaction, calculated in accordance with section 942.(C) In the third column, a short explanation stating that the estimated term is based upon assumptions about the recipient's income. For example: "This is our estimate of how long it will take to collect amounts due to us under the contract based upon the assumption that you will receive $6,000 in monthly income through your BrownPay account."
(9) In the first column, the eighth and ninth rows shall be combined and shall include the following language: "Prepayment."(10) In the eighth row, the second and third columns shall be combined and shall include only: (A) If, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay finance charges other than interest accrued since the recipient's last payment, the following statement: "If you pay off the financing faster than required, you still must pay all or a portion of the finance charge, up to $[maximum non-interest finance charge] based upon our estimates."(B) In all other cases, the following statement: "If you pay off the financing faster than required, you will not be required to pay any portion of the finance charge other than unpaid interest accrued."(11) In the ninth row, the second and third columns shall be combined and shall include: (A) If, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay additional fees and charges not included in the finance charge, the following statement: "If you pay off the financing faster than required, you must pay additional fees of [amount and description of fees]."(B) In all other cases, the following statement: "If you pay off the financing faster than required, you will not be required to pay additional fees."(12) If the contract provides for periodic payments that are not monthly, the provider shall insert one additional row below the fourth row, and the additional row shall include only the following information:(A) In the first column: "Estimated Monthly Cost".(B) In the second column, the estimated monthly cost that the recipient will pay over the term of the transaction calculated in accordance with section 942 of these rules. If the provider anticipates that the estimated monthly cost will vary over the term of the transaction, either due to changes in the recipient's income through the particular payment channel, a change in the split rate, or some other reason provided for in the contract, the provider shall list the estimated monthly costs and the time periods when those estimates apply. For example: Months 1-2:
$600/month
Months 3-6:
$1200/month
Month 7:
$1000/month
(C) In the third column, a short explanation of how the provider calculated the estimated monthly cost. For example: "Although you do not make payments on a monthly basis, this is our calculation of your average monthly cost based upon the payment amounts disclosed below."Cal. Code Regs. Tit. 10, § 914
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. Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802 and 22804, Financial Code.
1. New section filed 6-9-2022; operative 12/9/2022 pursuant to Government Code section 11343.4(b)(2) (Register 2022, No. 23). 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.