SB 505: Money Transmission Act: authentication.

The Money Transmission Act (MTA) prohibits a person from engaging in the business of money transmission in the state, or from advertising, soliciting, or holding itself out as providing money transmission in the state, unless the person is licensed by the Department of Financial Protection and Innovation under the act. The MTA defines money transmission to mean, among other things, selling or issuing stored value to a person located in the state and defines stored value to mean monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The MTA punishes noncompliance with, among other things, a civil penalty, license revocation, and, for certain violations, as a felony, as prescribed.

This bill would require, prohibit, beginning January 1, 2028, under the act, an operator of a stored value platform to reimburse a customer for any loss directly caused by a fraudulently induced transfer, as prescribed, and would require an operator of a stored value platform to establish means by which a customer can submit a claim for reimbursement that allow for the customer to communicate a claim through, among other methods, digital communication via the mobile application through which a customer is able to initiate a transfer of stored value on the stored value platform. a digital wallet provider or money transmitter operating in the state from allowing a user to log in without using two-factor authentication or multifactor authentication for any login by that user. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.