BILL ANALYSIS
SB 427
Page 1
Date of Hearing: June 30, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
SB 427 (Negrete McLeod) - As Amended: June 22, 2009
SENATE VOTE : 25-10
SUBJECT : Automotive repair: crash parts.
SUMMARY : Requires an automotive repair dealer (ARD) to include
the phone number of the Bureau of Automotive Repair (BAR) for
consumers to contact for a free inspection if they suspect auto
repair fraud or the unlawful pre-installation of auto body parts
without consent, on a written estimate and repair final invoice.
Specifically, this bill :
1)Redefines "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 outer panels and
exterior lighting; and includes the airbag in a motor
vehicle's inflatable restraint system.
2)Defines "Aftermarket crash part" to mean a replacement for any
crash part.
3)Requires an ARD who prepares a written estimate for repairs
that include the replacement of a deployed airbag that is part
of an inflatable restraint system, and who fails to repair and
fully restore the airbag to original operating condition, is
guilty of a misdemeanor punishable by a fine of $5,000,
imprisonment in the county jail for one year, or by both.
4)Requires the following statement in 12-point boldface type on
a final automotive repair invoice or a written itemized
estimate on or after January 1, 2011: "INSTALLING A PART,
OTHER THAN A PART DESCRIBED ON THE WRITTEN ESTIMATE, WITHOUT
PRIOR APPROVAL FROM THE CUSTOMER, IS UNLAWFUL. IF YOU WOULD
LIKE A FREE CAR REPAIR INSPECTION, PLEASE CALL THE STATE
BUREAU OF AUTOMOTIVE REPAIR AT (800) 952-5210."
5)Deletes references to repealed provisions of law and makes
technical and conforming changes.
EXISTING LAW :
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1)Authorizes BAR to license and regulate ARDs under the
Automotive Repair Act.
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.
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 Automotive Repair Act.
8)Defines various terms for purposes of the motor vehicle
replacement parts provisions of the Business and Professions
Code (BPC).
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.
FISCAL EFFECT : Unknown
COMMENTS :
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Purpose of the bill . According to the author's office, "While
the majority of auto body 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 auto
body repair industry. This bill ensures consumers are made
aware of the prohibition against parts switching, and provides
consumers with the means to protect themselves against this type
of fraud by providing them with instructions to contract the BAR
if they suspect anything wrong with the repair of the car."
Background . "Crash parts" or auto body parts, are generally
made of sheet metal, plastic, or glass that constitute the
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 motor vehicles
for use on that vehicle (e.g., a hood made by Ford for a Ford
vehicle). Non-OEM parts, on the other hand, are generic auto
parts made by an independent manufacturer that is not affiliated
with the motor vehicle's manufacturer. Non-OEM manufacturers
must "reverse-engineer" the replacement parts because they do
not have access to the OEM manufacturer's specifications,
because this information is proprietary. Non-OEM crash parts
are typically 20% to 65% less expensive than OEM crash parts.
Recent amendments remove the requirement that an airbag invoice
be provided to the consumer, and revise the notice requirement
to simply state that installing parts other than those described
on repair estimates is unlawful, and advising consumers that
they may obtain a free car repair inspection from the BAR.
Arguments in support . According to the Center for Auto Safety,
"Every year, auto crash repair fraud victimizes hundreds of
thousands of California motorists at a cost over $350 million.
Where the repairer fails to install a replacement airbag,
consumers can even be killed in a crash. SB 427 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
U.S. Department of Transportation (DOT) has found that 20% of
all deaths in crashes caused by an airbag failing to deploy are
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due to the airbag not having been installed in a repair made
prior to the crash.
"The other major provision in SB 427 is simply printing on both
the repair estimate and invoice [the] toll-free number of the
BAR to call if consumers suspect parts fraud or have auto repair
problems. Having the phone number on the repair estimate and
invoice is essential. Consumers normally have problems with
vehicle repairs after they leave the shop, so pamphlets and
displays at the auto repair dealer are inadequate in informing
consumers of who to call.
"Thirty years ago the DOT documented that 53 cents out of every
dollar consumers spend on auto repair in general was wasted. In
June 2003, the BAR completed a study of auto body collision
repairs by inspecting vehicles from around California. BAR's
inspections showed that 42% of the vehicles inspected had parts
or labor listed on the invoice that were not actually supplied
or performed.
"SB 427 is completely different from bills introduced in prior
(sessions). Neither AB 2825 in 2008 nor AB 1483 in 2007 covered
airbags that were not replaced in crash repairs. Neither bill
required the BAR's toll-free number on the repair estimate or
final invoice. SB 427 does not require repair dealers to sign
and verify crash parts on the estimate (that) were installed in
the vehicle. Nor does it require repairers to give consumers
invoices for any crash part costing over $50."
According to Consumers for Auto Reliability and Safety, "The
efficacy of air bags is not in dispute. They have been shown to
dramatically reduce the risks of death and injury in crashes?
However, air bags can be expensive to replace, and some
unscrupulous ARDs and rebuilders have resorted to installing
fake airbag covers or stuffing the airbag compartments with rags
or other materials instead of installing airbags designed for
the vehicle. Some entities advertise on the Internet that they
offer fake airbag covers that can masquerade as OEM airbag
covers, making it difficult for consumers to detect whether an
airbag was replaced or not. Some shady repair shops also
disable the circuitry that monitors whether the air bag is
operational, removing the visible warning (that shows) the
airbag is malfunctioning."
Arguments in opposition . According to the California New Car
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Dealers Association, "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. If the proponents of this
bill are truly concerned with preventing fraud and curtailing
the practice of part switching, zealous prosecution of existing
law by the BAR would accomplish that objective without the
unnecessary paperwork this bill would require. The bill's flaws
are compounded by requiring a new notice on the first page of a
final repair invoice. Repair dealers already have signs posted
in their facilities listing the 800-number of BAR; repeating the
fact that BAR is available to conduct free car inspections adds
little but cost to the repair dealer. Moreover, a statement
"installing a part, other than a part described on the written
estimate, is unlawful" by its very terms presupposes problems
with the repair that could be faced by the customer at this
repair dealer. The negative inference diminishes the reputation
of the vast majority of law-abiding and honest repair
facilities. The disclosure in 12-point font surrounded by a
box, even if improved in tone, will do little to educate
consumers about the practice of part switching. Working with
BAR to spread the word about this nefarious practice, including
dissemination of more information about the free Auto Body
Inspection Program other than on the repair invoice itself when
it is potentially too late, would be a much more effective
strategy than adding duplicative and unnecessary disclosures.
"We also fail to understand the purpose for which the definition
of "aftermarket crash part" in Business and Professions Code
9875 is being modified. Over the last several years numerous
bills have been proposed seeking state "certification" of
aftermarket crash parts made by someone other than the OEM.
None of those bills have ever been enacted. Yet, your bill
which is focused on consumer disclosure changes this definition
and adds others for no discernable purpose related to the
central aim of the bill. We are concerned that the sponsor
Certified Auto Parts Association is attempting to achieve
through definitional changes what they have failed to do in the
marketplace: make certified parts the equal of those made by
OEMs."
Prior Legislation . AB 2825 (Carter) of 2008, would have
required an automotive repair dealer, once repairs are
completed, to provide a written certification to the customer
that the crash parts identified on the written estimate are the
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same crash parts that were installed on the vehicle during
repair. The Governor vetoed the bill with the following
message: "The bill is essentially similar to a bill I vetoed
last year. The provisions in this measure are duplicative of
existing law and therefore unnecessary. Requiring ARDs to
provide additional paperwork is unnecessarily burdensome and
would increase expenses that could be passed on to the consumer,
with no additional benefit."
AB 1483 (Carter) of 2007 was a bill similar to AB 2825. The
Governor vetoed this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
Center for Auto Safety (CAS) (sponsor)
Advocates for Highway and Auto Safety
American Federation of State, County and Municipal Employees
(AFSCME)
Consumer Federation of California (CFC)
Consumers for Auto Reliability and Safety (CARS)
Consumers Union
Personal Insurance Federation of California (PIFC)
Public Citizen
Opposition
California Autobody Association (CAA)
California New Car Dealers Association (CNCDA)
Collision Repair Association of California (CRA)
Fender Mender Inc.
United Automobile Workers (UAW), Region 5
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301