BILL ANALYSIS
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|Hearing Date:April 20, 2009 |Bill No:SB |
| |427 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: SB 427Author:Negrete McLeod
As Amended:April 2, 2009 Fiscal: Yes
SUBJECT: Automotive repair: crash parts.
SUMMARY: Requires an automotive repair dealer performing auto
body or collision repair to place a notice on the written estimate
and final invoice stating that installing parts, other than those
described on the estimate, without the customer's prior approval
is unlawful and that the consumer may contact the Bureau of
Automotive Repair if fraud is suspected; requires an automotive
repair dealer to provide a customer copies of invoices of any
airbags that were installed; establishes misdemeanor penalties;
defines "crash part" and "aftermarket crash part;" becomes
effective January 1, 2011.
NOTE : This measure is before the Committee for reconsideration.
This measure failed passage in Committee by a vote of 5-3 on April
13, 2009.
Existing law:
1)Licenses and regulates more than 35,000 automotive repair
dealers (ARDs) under the Automotive Repair Act (Act) by the
Bureau of Automotive Repair (BAR) within the Department of
Consumer Affairs (DCA).
2)Requires an ARD to provide a customer with an itemized written
estimate for parts and labor before performing any work on the
customer's vehicle.
3)Prohibits an ARD from charging a customer for work done or parts
supplied in excess of the written estimate without first
obtaining a customer's oral or written authorization.
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4)Requires an ARD performing auto body or collision repair work to
identify whether each part is new, used, rebuilt, or
reconditioned on the written estimate. The written estimate
must also identify whether a crash part is an original equipment
manufacturer (OEM) or non-original equipment (non-OEM)
manufacturer crash part.
5)Requires the ARD to obtain authorization from the customer
before performing work and imposing charges.
6)Requires all work done by an ARD to be recorded on an itemized
invoice that describes all service work done and parts supplied,
and requires the invoice to contain specified information.
7)Establishes a misdemeanor (crime) penalty of up to six months in
jail or a $1,000 fine (or both), for any person who fails to
comply with the provisions of the Act.
8)Defines various terms for purposes of the motor vehicle
replacement parts provisions of the Business and Professions
Code (B&P Code).
Existing law (Vehicle Code):
9)Establishes a misdemeanor (crime) penalty of up to one year in
jail or a $5,000 fine (or both), for any person who installs or
reinstalls for compensation, distributes or sells a previously
deployed air bag in a vehicle, if the person knows that the air
bag has been previously deployed.
This bill:
1)Defines the following terms:
a) "Crash part" to mean any of the non-mechanical sheet metal
or plastic parts which generally constitute the exterior of a
motor vehicle, including inner and out panels and exterior
lighting and includes the airbag in a motor vehicle's
inflatable restraint system.
b) "Aftermarket crash part" to mean a replacement for any
crash part.
1)Requires an ARD to provide a customer copies of invoices of any
airbags installed as part of an inflatable restraint system.
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2)Establishes a misdemeanor (crime) penalty of up to one year in
jail or a $5,000 fine (or both), for an automotive repair dealer
who prepares a written estimate that includes replacement of a
deployed airbag and who fails to repair and fully restore the
airbag to original operating condition.
3)Requires the first page of the itemized written estimate and the
first page of the final invoice, to contain a statement in at
least 12 point bold face type in a box:
"INSTALLING A PART, OTHER THAN A PART DESCRIBED ON THE
WRITTEN ESTIMATE, WITHOUT PRIOR APPROVAL FROM THE CUSTOMER
IS UNLAWFUL. IF YOU SUSPECT PARTS FRAUD OR ARE CONCERNED
ABOUT THE REPAIR OF YOUR VEHICLE BY AN AUTOMOTIVE REPAIR
DEALER, CALL THE BUREAU OF AUTOMOTIVE REPAIR IN THE
CALIFORNIA DEPARTMENT OF CONSUMER AFFAIRS TOLL FREE AT
(800) 952-5210."
4)Becomes operative on January 1, 2011.
5)Deletes reference to a repealed provision of law and makes
conforming and technical changes.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by Center for Auto Safety
(Sponsor) to provide the automotive repair consumer with notice
that auto repair collision parts switching - a common activity
in some body shops in California and nationally - is fraud and
against the law. The Author states that the bill will also
provide the consumer with remedy by providing information on how
to contact the California Bureau of Automotive Repair (BAR) if
fraud is suspected. This measure is intended to deter parts
switching fraud by involving the repair facility in the
consumer's education and notice. The bill will further ensure
the consumer, the consumer's insurance carrier, as well as BAR,
that the air bag restraint system was installed with an air bag
in working order, according to the Author.
2.Background. "Crash parts," or "body parts," are parts generally
made of sheet metal, plastic, or glass that constitute the
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exterior of a motor vehicle and tend to serve a cosmetic
function. Examples of crash parts include bumper reinforcements
and absorbers, hoods, fenders, door shells, rear outer panels,
deck and trunk lids, quarter panels, truck beds and box sides,
body side panels, tailgates, and lift gates. OEM crash parts
are made by the manufacturer of a given motor vehicle for use on
that vehicle (e.g., a hood made by Ford for a Ford vehicle).
Non-OEM parts, on the other hand, are imitation auto parts made
by an independent manufacturer that is generally not affiliated
with the manufacturer of the motor vehicle for which the part is
intended. Non-OEM manufacturers must "reverse-engineer" the
replacement parts because they do not have access to the OEM
manufacturer's specifications for a given part (because this
information is proprietary). Non-OEM crash parts typically cost
20% to 65% less than OEM crash parts.
3.Reestablishment of the BAR Autobody Inspection Program. The
Department of Consumer Affairs' 2006-07 Annual Report states
that the BAR reestablished the Auto Body Inspection Program in
January 2007. This program allows qualified consumers to
receive free inspections to verify the collision repair work
done on their cars. During the 2006-07 fiscal year, the BAR's
Auto Body Inspection Program completed 232 inspections, of which
81 (35 %) uncovered poor workmanship and/or billing for parts
and services not performed. A total of 86 complaints were
opened as a result.
4.Related Legislation. AB 2825 (Carter, 2008) would have
authorized a customer to receive copies of invoices from the
distributor, dealer or manufacturer for all crash parts
installed in excess of $50; required the written estimate and
the final invoice to include a notice stating that installing
parts other than those described on the estimate without the
customer's prior approval is unlawful; and required copies of
crash part invoices, if requested by the consumer, to be
attached to the final invoice. That bill was vetoed by the
Governor, citing that the bill was duplicative of existing law
and therefore unnecessary.
AB 1483 (Carter, 2007) would have required an ARD, once repairs
are completed, to provide a written affirmation to the customer
on the first page of the final invoice that the parts identified
on the estimate are the parts that were installed on the vehicle
during repair. That bill was vetoed by the Governor, citing
that it was duplicative of existing law and therefore
unnecessary, and that the provisions may lead to increased
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expenses and decreased efficiency at automotive repair dealers.
5.Arguments in Support. The Center for Auto Safety (CAS) states:
"While the majority of autobody repair shops comply with the
law, the problem of "parts switching" - or billing the consumer
for a more expensive OEM part, but installing a less-expensive
aftermarket part - remains a common area of fraud in the
autobody repair industry." CAS indicates that each year auto
crash repair fraud victimizes hundreds of thousands of
California motorists at a cost of over $350 million. Where the
repairer fails to install a replacement airbag, consumers can
even be killed in a crash. This bill would strengthen current
law by requiring the parts invoice for any replacement airbag
installed as part of the vehicle repair to be attached to the
final repair invoice given to a consumer. The US Department of
Transportation has found that 20% of all deaths in crashes
caused by an airbag failing to deploy are due to the airbag not
having been installed in a repair prior to the crash.
CAS also argues that putting the toll free phone number of BAR on
both the repair estimate and invoice is essential, since
consumers normally have problems with vehicle repairs after they
leave the shop and the pamphlets and displays at the repair shop
do not inadequately inform consumers who to call.
CAS believes that repair fraud continues to be a problem stating
that thirty years ago the U.S. Department of Transportation
documented that 53 cents out of every dollar consumers spend on
auto repair in general was wasted, and in 2003 the BAR's study
of auto body collision repairs showed that 42% of the vehicles
inspected had parts or labor listed on the invoice that were not
actually supplied or performed.
CAS also asserts that this bill is completely different from prior
bills in that the bill deals with airbags that were not replaced
in crash repairs, and requires the BAR's toll free number on the
repair estimate and final invoice which neither of the previous
bills did.
American Federation of State, County and Municipal Employees
AFL-CIO supports the bill, believing that educating the public
about their right for an inspection by the BAR after their
vehicle is repaired will protect the consumer and the insurance
company in the event of criminal negligence on the part of the
ARD.
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6.Arguments in Opposition. California New Car Dealers Association
(CNCDA) is opposed and contends that the bill requires
automotive repair dealers to duplicate work already required by
statute. It is already fraud (intentional misrepresentation) to
disclose on an estimate that the repair dealer will put OEM
parts on a car, not do so, and then itemize that he or she did
so on the invoice. CNCDA suggests instead that zealous
prosecution of existing law by the Bureau of Automotive Repair
(BAR) would accomplish that objective without the unnecessary
paperwork this bill would require.
The California Autobody Association (CAA) is also opposed and
believes the bill only creates another layer of unnecessary
administrative paper work for the automotive repair dealer and
frustration and confusion to the consumer. CAA argues the bill
duplicates existing law which requires written disclosures and
certifications on both the estimate and the final invoice for
all parts, including airbags; furthermore, repair shops must
already post signs listing consumer rights and the BAR's toll
free telephone number.
The Collision Repair Association of California (CRA) writes that
it is supportive of efforts to curb auto parts fraud and
increasing BAR's re-inspection program, but not of simply
requiring ARDs to give customers copies of wholesale invoices
for airbags and to add fraud alerts to customer invoices. CRA
further objects to adding "airbags" to the definition of "crash
parts" and states that the collision industry and insurers have
long viewed crash parts as non-mechanical parts while an airbag
is mechanical in nature. CRA contends that the airbag is an
integral part of a safety restraint system, not a stand alone
part.
NOTE : Double-referral to Judiciary Committee second.
SUPPORT AND OPPOSITION:
Support:
Center for Auto Safety (Sponsor)
American Federation of State, County and Municipal Employees
AFL-CIO
Consumer Federation of California
Consumers for Auto Reliability and Safety
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Personal Insurance Federation of California
Public Citizen
One Individual
Opposition:
Automotive Service Councils of California
California Autobody Association
California New Car Dealers Association
Collision Repair Association of California
One Individual
Consultant:G. V. Ayers