BILL ANALYSIS Ó
AB 1215
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CONCURRENCE IN SENATE AMENDMENTS
AB 1215 (Blumenfield)
As Amended August 18, 2011
Majority vote
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|ASSEMBLY: |75-3 |(June 2, 2011) |SENATE: |30-4 |(August 30, |
| | | | | |2011) |
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Original Committee Reference: TRANS.
SUMMARY : Requires dealers of new motor vehicle to participate
in the electronic vehicle registration program of the Department
of Motor Vehicles (DMV). Requires license plates to be attached
upon receipt by the vehicle owner. Increases the maximum dealer
document preparation charge that dealers may charge. Requires
dealers of used vehicles to obtain National Motor Vehicle Title
Information System (NMVTIS) reports.
The Senate amendments :
1)Make legislative findings and declarations regarding NMVTIS.
2)Allow an $80 document processing charge (as opposed to $60 in
the Assembly-passed version of this bill) for vehicles bought
from a DMV business partner and a $65 charge (as opposed to
$50 in the Assembly-passed version of the bill) for a vehicle
bought from a dealer who is not a DMV business partner.
3)Require an electronic filing fee charged by dealers to vehicle
purchasers to be no more than the actual amount the dealer is
charged by a first-line service provider.
4)Prohibit dealers from displaying or offering for sale at
retail a used vehicle unless the dealer first obtains a NMVTIS
vehicle history report from a NMVTIS data provider for the
vehicle identification number of the vehicle.
5)Require a dealer offering a used vehicle whose NMVTIS vehicle
history report indicates it is or has been a junk automobile
or a salvage automobile or the vehicle has been reported as a
junk automobile or a salvage automobile by a junk yard,
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salvage yard, or insurance carrier, or the certificate of
title contains a brand, to post a specified disclosure notice
on the vehicle while it is displayed for sale at retail and to
provide a retail purchaser with a copy of the NMVTIS vehicle
history report upon request prior to sale.
6)Specify that these requirements do not apply to a used vehicle
for which NMVTIS does not have a record if the dealer attempts
to obtain a NMVTIS vehicle history report for the vehicle.
7)Allow a NMVTIS data provider to include additional vehicle
history information obtained from resources other than NMVTIS.
8)Provide that this bill does not create any legal duty upon the
dealer related to the accuracy, errors, or omissions contained
in a NMVTIS vehicle history report that is obtained from a
NMVTIS data provider or any legal duty to provide information
added to NMVTIS after the dealer obtained the NMVTIS vehicle
history report.
9)Make the bill's NMVTIS -related requirements inoperative in
the event that all NMVTIS data providers cease to make NMVTIS
vehicle history reports available to the public and declare
the Legislature's intent that the United States Department of
Justice notify the Legislature and DMV in such an eventuality.
10)Exempt the sale of recreational vehicles, motorcycles, and
off-highway motor vehicles from these provisions.
EXISTING LAW allows:
1)A maximum document preparation charge of $55 for the sale of a
new vehicle, and $45 for the lease of a new vehicle, by a
vehicle dealer.
2)Newly sold vehicles to be operated without license plates
until the plates are received or until the end of a six-month
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period after the date of sale, whichever occurs first.
FISCAL EFFECT : The Senate Appropriations Committee analysis
cites annual DMV staff savings of $3.8 million and annual DMV
fee increases of $5.8 million, both attributable to electronic
registration. The loss of data sales attributable to the NMVTIS
provisions will potentially cause DMV a $300-500 thousand annual
loss. DMV's one-time cost for enlisting additional business
partners will be fully offset by fees.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required a new motor vehicle dealer to use electronic programs
provided by the dealer's first-line service provider to
register a vehicle it sells or leases, other than an
off-highway vehicle or a recreational vehicle, if DMV permits
the transaction to be processed electronically.
2)Prohibited a dealer from charging consumers an electronic
filing fee in excess of $29, or the amount the dealer is
charged by a first-line provider, whichever is less, for
providing license plate processing, postage, fees and services
and prohibits the consumer charge from being represented as a
governmental fee.
3)Limited the charge a dealer may seek from a vehicle purchaser
for document preparation and associated costs to a maximum of
$60 if the dealer is by contract a business partner of DMV and
$50 if the dealer is not a DMV business partner.
4)Allowed a vehicle displaying a copy of the sales report to be
operated without license plates until the plates are received
by the purchaser or upon the expiration of a 90-day period
commencing from the date of sale, whichever occurs first.
5)Required a license plate issued by California or by any other
state or jurisdiction to be attached to the vehicle upon
receipt.
6)Made it unlawful, effective October 1, 2012, for a dealer to
sell a new motor vehicle, other than a motorcycle or
off-highway vehicle, unless that dealer is a private industry
partner of DMV.
7)Established an effective date of July 1, 2012, for all the
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other provisions of this bill noted above.
COMMENTS : In 2001, DMV established an Electronic Vehicle
Registration (EVR) program in which dealers who enter into
contracts as DMV "business partners" may participate at their
option. At this time it is estimated about half of new car
dealers participate in the program and no more than 40% of new
cars are registered electronically. This bill would require all
new vehicle dealerships to register the cars that they sell
through the EVR program, beginning July 1, 2012. This would
have the effect of allowing vehicle license plates to reach
consumers within weeks rather than months while potentially
saving DMV millions of dollars for the cost of processing
registration materials received in a paper format. (Proponents
cite estimates of $14 for DMV to process a paper registration
application as opposed to $7 for an electronic one.) Quicker
distribution of license plates coupled with this bill's
requirement for license plates to be installed by vehicle owners
upon receipt might also result in a reduction in the number of
vehicles riding through toll facilities without being billed for
a toll, since the primary means of toll evasion enforcement is
through photographs taken of the license plates of offending
vehicles.
DMV regulations currently allow participating dealers to levy an
optional consumer charge of up to $29 per registration to recoup
their costs. This bill eliminates that optional charge while at
the same time allowing dealers to pass on to consumers only
their actual cost for processing transactions and mailing
license plates, which currently ranges from $18-$20.
This bill also updates the maximum charge a dealer may assess on
the sale of a new vehicle for the processing of documents from
the current limit of $55 for vehicle sales and $45 for vehicle
leases, to $80 for DMV business partners and $65 for all other
dealers.
Supporters of this bill note that current delays in the delivery
of license plates as well as delays in their being installed by
vehicle owners have "led to many drivers circumventing toll
payment. In 2010, 734,000 vehicles did not pay a toll to the
Bay Area Toll Authority, resulting in lost toll revenue of $3.7
million and lost toll fines totaling $22 million. In 2010, the
lost toll revenue for the (Orange County) Transportation
Corridor Agencies (TCAs) was $2 million." On this point,
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however, the TCAs contend the bill "will not solve this problem
nor change scofflaw behavior." While the TCAs do not oppose the
bill, they feel the toll evasion problem is more a question of
willful behavior, rather than a delay in receiving new plates.
Toll agencies would prefer that the bill establish a penalty for
failure to install plates when they are received (it is
currently a "fix-it" ticket). While such a provision is not
included in AB 1215 (Blumenfield), the bill nevertheless moves
in a positive direction by having plates delivered earlier and
at least requiring their immediate installation.
As to the bill's increase in allowable document processing
charges, supporters claim that it will help offset the new EVR
requirement as well as accounting for the dozens of documentary
burdens already imposed on dealers. Even with this increase,
they say, "the document processing charge will still be tied for
the lowest in the country even though dealer costs to comply
with government requirements to sell or lease a vehicle already
range from $75 for a simple transaction (involving the purchase
of a new car negotiated in English by a buyer and co-buyer with
good credit and no trade-in) to $180 for a complex transaction
(involving the purchased of a used vehicle by a foreign language
buyer and co-buyer with poor credit and a trade-in)."
The cap on document preparation fees has been raised a number of
times over the last 25 years. In 1987, it was raised from $20
to $25. Four years later it was increased to $35. In 1996, a
limit of $45 was established. Most recently, in 2006, the fee
for new car sales was increased to $55, although for vehicle
leases, it remained at $45.
There have been a number of statutes enacted in the last several
years that have increased or altered dealer document
requirements, including new insurance disclosures, foreign
language contract translation requirements, consumer
identification verification requirements, and changes to
documents required by changes to the Smog Check program, among
others. Significantly, the Car Buyers Bill of Rights, AB 68
(Montañez), Chapter 128, Statutes of 2005, imposes substantial
new document requirements on motor vehicle dealers resulting in
increased costs. AB 68 requires a car dealer selling a used
vehicle for less than $40,000 to offer the buyer a two-day
contract cancellation option agreement; requires car dealers who
finance a sale to disclose the price of additional products,
services, or other items included in the contract; and requires
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dealers who finance a sale to disclose the buyer's credit score.
As noted above, dealers maintain that complying with all these
requirements costs them $75 for a simple transaction and up to
$180 for a complicated transaction.
Examined in a historical context, it is probably fair to say
that document preparation fees have not kept pace with the
increasing cost that dealers face in meeting mandated paperwork
requirements. This is certainly true in the instance of vehicle
leases, whose current fee limit has been in place through 15
years of inflation and new mandates. On the other hand, one
might question why the cost of document preparation is not
simply built into the sale (or lease) price of a vehicle, just
as any number of other costs are recovered through the price
structure.
Regarding NMVTIS, which is an electronic database that provides
consumers with information about a vehicle's condition and
history, this bill could assist consumers who are on a car lot
comparing two vehicles side by side. If one vehicle has a
warning and one does not, the consumer is able to make an
informed decision after asking the dealer to see a copy of the
NMVTIS report. Consumers for Auto Reliability and Safety
(CARS), in support, contends: "Vehicles with a history of prior
major damage tend to be unsafe, and worth far less than similar
undamaged vehicles. For example, they may lack air bags, have
bent frames that make them prone to tipping over in an emergency
braking situation, or have electronic systems that are corroding
and will inevitable malfunction because the vehicle was
submerged in flood water. In fact, whether a vehicle was
totaled or not may be the single most important piece of
information that car buyers need to know, in order to make an
informed comparison between two otherwise similar vehicles?AB
1215 promises to be a vitally important next step toward curbing
salvage and rebuilt wreck frauds and ensuring that NMVTIS
fulfills its potential for benefiting the public."
CarFax, which opposes the bill, expresses concern that
"mandating NMVTIS alone may provide used car consumers with a
false sense of security" and that this bill would offer "no
incentive for the seller to research beyond NMVTIS to study
other more inclusive vehicle history reports which would
disclose hazardous safety data not disclosed by NMVTIS." To
address their concerns, CarFax proposes allowing dealers to
obtain either a NMVTIS or a commercially available vehicle
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history report (thus allowing dealers to use CarFax reports
instead of NMVTIS). The California New Car Dealers, in response
assert: "While Car Fax and Experian Auto Check provide valuable
information that is beneficial to consumers and dealers, their
title database information is proprietary and not subject to
oversight by any governmental entity. Commercial providers who
acquire vehicle title information from entities other than
NMVTIS purchase their information on an ad hoc basis through
commercial contracts with certain states, insurers and other
entities. These contracts are not subject to federal review,
are subject to amendment, cancellation, or expiration, and do
not cover all entities required to report information to NMVTIS.
No entity is statutorily required to provide information to Car
Fax, Auto Check, or any other commercial vehicle history
database?Nothing in the bill restricts the ability of commercial
providers, like Car Fax, from providing the additional accident
and other information they obtain through their own sources
beyond NMVTIS."
Legislative history: AB 1001 (Núñez) of 2005 would have
increased the document preparation fee for vehicle sales to $55
from the then-maximum level of $45. That bill was vetoed by
Governor Schwarzenegger who said he did "not believe California
consumers should be saddled with another hidden fee." SB 44
(Torlakson), Chapter 623, Statues of 2006, raised the document
preparation fee to its present level of $55, but only for
vehicle sales, not for leases - which remained at $45. AB 1939
(DeSaulnier) of 2008 would have raised the document preparation
fee to $65 for both vehicle sales and vehicle leases. That bill
passed the Assembly floor but died in the Senate without having
been heard in policy committee.
Related legislation: SB 125 (Emmerson) of 2011 would allow for
the impoundment of a vehicle that is registered to a chronic
evader of toll payments until all outstanding tolls and all
required penalties are paid to the issuing agency. At this
time, SB 125 remains in the Senate Committee on Transportation
and Housing.
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093
FN: 0002053
AB 1215
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