AB2028 amends Financial Code Section 23016 to require the Commissioner of Financial Protection and Innovation to include the pro rata calculation and its component line items on any invoice or assessment notice sent to a deferred‑deposit (payday) licensee. The bill specifies the items that must appear as separate lines — e.g., the commissioner’s estimated program costs, any deficit, aggregate industry transaction totals, the licensee’s transaction totals, and the number of licensed locations.
The change is a narrow but practical transparency reform: it lets licensees see exactly how the annual fee was computed, which matters for internal accounting, dispute resolution, and external audit. It also shifts modest new record‑reconciliation and reporting work onto both the commissioner’s office and licensees and raises practical questions about confidentiality, data quality, and how disputes over the inputs will be resolved in practice.
At a Glance
What It Does
The bill requires assessment invoices to show the pro rata calculation used to compute each licensee’s share and to present every component of that calculation as separate line items. It keeps the existing assessment mechanics — pro rata share based on a licensee’s dollars of deferred‑deposit transactions relative to the aggregate, plus a per‑location minimum of $500 — but forces the computation into the open.
Who It Affects
This targets licensed deferred‑deposit operators (commonly called payday lenders), the Commissioner’s office that issues assessments, in‑house and external compliance and accounting teams, and third‑party auditors or counsel engaged in billing disputes. Small multi‑location operators and trade associations should take particular note.
Why It Matters
By codifying invoice transparency, the bill alters how assessments are verified and contested: licensees can audit the inputs, and the regulator must produce the underlying figures on demand. That reduces information asymmetry but creates new administrative tasks and potential confidentiality concerns the regulator and industry will have to manage.
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What This Bill Actually Does
Under current law the commissioner estimates the annual cost to run the deferred‑deposit licensing program, computes each licensee’s pro rata share based on reported transaction volume, and bills licensees accordingly. AB2028 does not change how the share is computed, but it obliges the commissioner to put the math on the bill.
Every invoice must show the pieces that feed the arithmetic so a licensee can trace the billed amount back to specific inputs.
Practically that means the commissioner will present the estimated program costs for the coming year, any current‑year deficit the program seeks to recover, the industry aggregate total of deferred‑deposit dollars, the individual licensee’s total of such dollars, and the number of the licensee’s locations — each as separate line items on the assessment notice. Those items together produce the pro rata share; the statute still preserves the minimum charge of $500 per licensed location and the underlying allocation method tied to transaction dollars.The bill leaves intact the administrative timeline and enforcement mechanics in Section 23016: the commissioner sends notices by May 20, payments are due within 30 days, a 1 percent monthly penalty applies to late payments, and failure to pay by June 30 lets the commissioner summarily suspend or revoke a certificate (subject to a post‑order hearing procedure).
What AB2028 does add is a clear paper trail for any subsequent reconciliation or appeal: licensees get the inputs they need to challenge arithmetic errors, mismatched transaction totals, or incorrect location counts.That clarity is useful for compliance teams and auditors but not costless. The regulator will need to produce more detailed invoices, ensure the numbers are defensible, and probably beef up record‑keeping systems.
Licensees will have to reconcile their annual report numbers to the invoice line items and decide whether to pursue administrative remedies when they see disputes. The bill does not add a new audit standard, confidentiality protections for disclosed figures, or an alternative billing procedure for contested inputs — gaps that will matter in implementation.
The Five Things You Need to Know
The invoice must display the pro rata amount calculation and list each component as its own line item.
Required line items are: estimated program costs for the coming year; any program deficit the year of assessment; the aggregate industry dollar total of deferred‑deposit transactions; the licensee’s dollar total of such transactions; and the licensee’s number of licensed locations.
The law preserves the existing allocation rule where a licensee’s pro rata share is tied to its transaction dollars relative to the industry aggregate, subject to a minimum charge of $500 per licensed location.
Timing and enforcement in the statute remain: the commissioner notifies licensees by May 20, payment is due within 30 days, a 1% monthly penalty applies to late payments, and nonpayment by June 30 can lead to summary suspension or revocation.
If a licensee asks for a hearing within 30 days of an order, the order is deemed rescinded if the hearing does not occur within 60 days of the request.
Section-by-Section Breakdown
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Assessment obligation and estimated charges
This subsection restates the commissioner’s authority to estimate and levy each licensee’s share of costs and any deficits. For practitioners, this is the statutory authorization for annual budgeting and invoicing: the commissioner may recover both projected operating costs and shortfalls from the current year.
Pro rata formula and per‑location minimum
Paragraph (2) ties apportionment to transaction dollars by defining the pro rata share as the licensee’s deferred‑deposit dollar volume divided by the industry aggregate shown on annual reports. Paragraph (3) preserves the floor: no licensee may be assessed less than $500 per licensed location. Operationally, expect invoices to display both the percentage allocation and the application of the $500 floor when it overrides the computed share.
Notice, payment window, and late penalty
The commissioner must mail assessment notices by May 20 each year and allow 30 days for payment. If payment is late the statute authorizes a 1% monthly penalty on the outstanding assessment. That timing has two consequences: licensees have a tight reconciliation window each spring, and missed payments quickly accrue meaningful penalties.
Enforcement: suspension, revocation, and hearing timing
Nonpayment by June 30 triggers summary suspension or revocation of the license, a severe enforcement tool. A licensee may request a hearing within 30 days after an order; if the hearing isn’t held within 60 days the order is treated as rescinded retroactively. This creates practical pressures on the regulator to schedule hearings promptly and on licensees to file timely challenges.
Invoice content requirements — line‑item disclosure
This new paragraph is the core of AB2028: the invoice must show the math. It obligates the commissioner to include, as separate line items, the estimated program costs, any deficit, the aggregate industry transaction total, the licensee’s transaction total, and the number of license locations. For compliance teams, each of those items becomes a likely focal point in reconciliations and disputes — and the regulator must be ready to substantiate each figure on demand.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Licensed deferred‑deposit operators: they gain the ability to verify the regulator’s inputs and to identify arithmetic or reporting errors before or during a challenge.
- Compliance and accounting teams at licensees: clearer invoices reduce time spent reverse‑engineering assessments and speed reconciliations for financial statements.
- External auditors and counsel representing licensees: line‑item disclosure simplifies evidence gathering when evaluating assessment fairness or materiality.
- The regulator (Commissioner’s office): having a standardized invoice format can make internal reviews and public accountability easier and reduce ad hoc document requests.
Who Bears the Cost
- Licensees (especially small operators): they'll need staff time to reconcile reported transaction volumes and location counts to the invoice, and may incur legal or accounting fees to contest discrepancies.
- The Commissioner’s office: preparing defensible, itemized invoices and responding to disputes will require updated systems and added administrative labor.
- State administrative hearing resources and counsel: more transparent invoices may generate more disputes and hearings, increasing workload for administrative law judges and agency counsel.
- Trade secrecy interests of operators: publishing transaction totals on invoices risks exposing commercially sensitive aggregate metrics to staff or third parties without a clear confidentiality regime.
Key Issues
The Core Tension
The central dilemma is transparency versus administrative and commercial cost: forcing agencies to disclose the arithmetic behind fee assessments improves accountability and makes disputes easier to evaluate, but it also increases the regulator’s workload, risks exposing sensitive business data, and will surface definitional gaps in how transaction volumes are measured — trade‑offs with no perfect technical fix in the text.
AB2028 improves invoice transparency but leaves several implementation questions unaddressed. The statute mandates disclosure of the inputs but does not define the precise methodology for counting "deferred deposit transactions made" (for example, whether the figure is gross dollars originated, dollars outstanding at year‑end, or net of chargebacks).
That ambiguity will drive disputes about the proper numerator and denominator in the pro rata calculation.
The bill also omits confidentiality safeguards for figures that some licensees consider proprietary. While the requirement is simply to include the line items on the invoice sent to the licensee, distribution and record‑retention practices could expose those numbers to third parties (employees, accountants, vendors) and potentially to public records requests.
Finally, producing defensible line items will require the commissioner to upgrade data systems and validation processes; without that investment, itemized invoices could create more disputes than clarity, as licensees challenge poorly sourced or inconsistent inputs.
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