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The Check Sellers, Bill Payers, and Proraters Law, contained in Division 3 of the California Financial Code beginning at Section 12000, establishes four distinct license categories administered by the Department of Financial Protection and Innovation (DFPI). Law Offices of Alan Abergel, P.C. ("LOAA") represents check sellers, bill payers, general proraters, and special proraters in DFPI licensing, compliance, document drafting, and enforcement defense. The firm represents these businesses; it does not represent consumers.
Check Sellers sell checks, money orders, or drafts used by others to pay obligations or transfer money, typically distributed through a network of agents such as small markets and check cashing businesses. Customers commonly purchase these instruments to pay rent or utilities, or to send money domestically or abroad.
Bill Payers receive money as an agent of an obligor for the purpose of paying that obligor's bills, receiving a fee from the obligor for the service.
General Proraters receive money or property from a debtor, for compensation, for the purpose of distributing it among the debtor's creditors in payment or partial payment of the debtor's obligations. This category corresponds to debt management plan structures, in which a consumer makes a single payment that the prorater distributes proportionally among creditors.
Special Proraters pay a customer's bills as part of broader management of the customer's affairs, and are generally business agents or managers rather than dedicated debt-payment services.
As a California check seller license lawyer and California bill payer license attorney, LOAA advises businesses on which of these categories, if any, applies to their operations, since a single business model may implicate more than one category, or may fall outside all of them and instead be governed by a related regulatory framework.
Because the four categories are defined by function rather than industry label, LOAA advises clients on how their actual operations map onto the statutory definitions, including whether a business sells or issues payment instruments directly or through an agent network, whether funds are remitted to a single payee or distributed among multiple creditors under a plan, whether bill payment occurs incidentally to broader management of a customer's affairs, and whether an applicable exemption may govern the activity instead of licensure. LOAA provides written legal opinions addressing this analysis for companies.
Applications for all four license categories are submitted on DFPI-CSCL 104, the Application for a Check Seller, Bill Payer, General Prorater or Special Prorater License. As DFPI check seller application counsel, LOAA represents applicants in DFPI licensing requirements.
The distinction between bill payer activities and other types of payment processing or money transmission can be nuanced, and businesses that handle customer funds for the purpose of making payments to third parties must carefully evaluate whether their activities require a bill payer license, a money transmitter license, or both. Some business models may also implicate the prorater licensing requirements discussed below, depending on whether the company is simply remitting payments on behalf of individual customers or is aggregating funds and distributing them among multiple creditors according to a proration plan.
LOAA advises companies on the proper characterization of their business activities under the Check Sellers, Bill Payers, and Proraters Law and assists those that require a bill payer license with the DFPI application process. The firm also helps licensed bill payers develop and maintain compliance programs that address the trust fund handling, record-keeping, and reporting requirements specific to their license category. For bill payment companies that operate at the intersection of multiple regulatory frameworks — such as those that also engage in money transmission or that process payments electronically in ways that implicate the federal Electronic Fund Transfer Act — LOAA provides integrated compliance guidance that addresses all applicable regulatory legal requirements.
LOAA provides written legal opinions about whether or not certain business models require a California license(s) or registration(s) from DFPI.
Check sellers commonly distribute payment instruments through networks of retail agents, such as small markets and check cashing locations, who split the transaction fee with the licensee. As check seller agent compliance counsel, LOAA drafts and reviews agent agreements addressing the agent's authority, fee splits, funds handling and remittance obligations, and the licensee's oversight responsibility for agent conduct, since a licensee typically remains responsible for compliance failures occurring within its agent network.
Bill payers and proraters handling customer funds are subject to trust fund handling requirements under the Law and its implementing regulations. As prorater trust account compliance counsel, LOAA advises licensees on the maintenance of trust accounts for customer funds, receipt and disbursement recordkeeping documenting funds received from customers and distributed to creditors or payees, and customer agreements documenting the terms of the payment or proration arrangement, including fees charged and the licensee's distribution obligations.
Licensees are subject to periodic DFPI examination of their financial condition, trust account handling, and compliance practices. LOAA advises licensees on examination preparation, response to examination findings, and, where applicable, the audit and notice obligations.
LOAA assists licensees with notifying the DFPI of material changes to licensed operations, including changes in ownership or control of the licensed entity.
Licensees under the Check Sellers, Bill Payers, and Proraters Law are subject to DFPI enforcement tools including citations, desist and refrain orders, license suspension or revocation, and accusations filed with the Office of Administrative Hearings. LOAA represents licensees in DFPI investigations, examinations, and administrative proceedings, and in related matters before the Consumer Financial Protection Bureau where federal jurisdiction overlaps with licensed activity.
LOAA advises clients on the boundaries between Check Sellers, Bill Payers, and Proraters Law licensure and several related but distinct regulatory categories:
California check cashers
Credit counseling agencies
Businesses operating across these categories, such as a company that both sells money orders and transmits funds internationally, frequently require more than one license or registration to operate lawfully. LOAA advises companies on the full scope of state and federal licensure implicated by their business activities.
Exemptions
The Law contains exemptions that may apply depending on a company's structure and the nature of its transactions. Because eligibility for these exemptions depends on the current statutory and regulatory text and on DFPI guidance that may be updated, LOAA verifies the applicable requirements against current DFPI publications and provides a written legal opinion addressing exemption eligibility for a company's specific circumstances.
Law Offices of Alan Abergel, P.C. represents check sellers, bill payers, general proraters, and special proraters in DFPI licensing, including money order seller license California applications and debt management prorater license matters, as well as legal and regulatory compliance and enforcement defense. Contact LOAA to discuss your Check Sellers, Bill Payers, and Proraters Law business's legal services needs.
Disclaimer: The information on this page is provided for general informational purposes only and does not constitute legal advice. No attorney-client relationship is created by reading this content. Every legal matter is unique, and you should consult directly with a qualified attorney regarding your specific circumstances.
"I engaged Alan to help me through the complexities of obtaining my Lenders License. He was very knowledgeable about the process and provided me with a high level of service.I worked quickly getting him all the information needed and he worked at my pace. He was responsive to e-mails and questions and followed up with the DFPI to make sure everything was filed correctly.I had read online that this process could take as long as 6 months however Alan completed the assignment in less than 3 I will be retaining his services in the future to ensure my company remains in compliance."
-Petroleum Realty Group Inc.
"I hired Alan to represent me as a mortgage broker before the California Department of Real Estate. I couldn't be more pleased with Alan's services from start to finish. Alan was clear and concise. Alan's communication throughout the process was professional. I received the results I hoped for. Thank you Alan. I'll definitely recommend you to ALL and use your services again in the future shall I need anything!"
-Anonymous
"Very helpful in assisting in obtaining an OCCC Texas Motor Vehicle Sales Finance License. Very knowledgeable in answering all questions the OCCC asked for on their questionnaire. Highly recommended and would re-hire for any future assistance regarding motor vehicle and finance business. God Bless!"
-Raul
