Detailed Summary of SB 1311: Synopsis & Applicability to CUs


As of Jan. 1, 2023, Senate Bill 1311 will go into effect in California — and credit unions should be prepared to comply. Please read the League’s detailed summary (by Moore, Brewer & Wolfe — A Professional Corporation).

Our analysis provides a helpful synopsis, background, the key provision, penalties and unfair competition applicable to state and federal credit unions, and continuing developments to watch. Changes made in SB 1311 will clearly impact California credit unions, as well as other credit unions doing business in California.

SB 1311 Background & Context
This new bill was sponsored by the California Attorney General’s office to increase a variety of protections to servicemembers and veterans, and to “eliminate a loophole” in the Military Lending Act (MLA) when it comes to loans secured by personal property or a motor vehicle that would make such loans exempt from the MLA.

The League was the leading trade association to first recognize that Section 5 of SB 1311 creates unintended consequences that will harm military servicemembers by preventing access to GAP-waiver and other credit-related ancillary products. Despite a heavy lobbying effort, we were unable to remove Section 5 from the bill. Thus, this section will require any auto transaction that has a credit insurance product to now comply with the federal MLA.

Another Recent GAP Bill (AB 2311)
As a reminder, the League also recently provided a detailed summary of Assembly Bill 2311 (motor vehicle conditional sale contracts and GAP), which is also effective Jan. 1, 2023.

In addition to this detailed summary on AB 2311, you can ready our announcement article here.

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