BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1534
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          ASSEMBLY THIRD READING
          AB 1534 (Wieckowski)
          As Amended May 21, 2012
          Majority vote 

           JUDICIARY           6-3         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Feuer, Atkins, Dickinson, |Ayes:|Fuentes, Blumenfield,     |
          |     |Monning, Wieckowski,      |     |Bradford, Charles         |
          |     |Alejo                     |     |Calderon, Campos, Davis,  |
          |     |                          |     |Gatto, Ammiano, Hill,     |
          |     |                          |     |Lara, Mitchell, Solorio   |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Wagner, Huber, Jones      |Nays:|Harkey, Donnelly,         |
          |     |                          |     |Nielsen, Norby, Wagner    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Requires buy-here-pay-here dealers to affix a label 
          displaying the reasonable market value of the vehicle on every 
          used car for sale.  Specifically,  this bill  :   

          1)Defines "buy-here-pay-here dealer" to mean an automobile 
            seller who enters into conditional sale contracts or lease 
            contracts, as defined, and who does not routinely assign those 
            contracts to an unaffiliated third-party finance or leasing 
            source.

          2)Requires a buy-here-pay-here dealer to affix a label on any 
            used vehicle being offered for sale that states the 
            "reasonable market value" of that vehicle, defined as the 
            average retail value based on the condition, mileage, year, 
            make, and model of the vehicle as determined within the last 
            60 days by a nationally recognized pricing guide.

          3)Requires the above label to meet all the following conditions:

             a)   Be in writing with a heading that reads "REASONABLE 
               MARKET VALUE OF THIS VEHICLE" in at least 16-point bold 
               type and text in at least 12-point type.

             b)   Be located adjacent to the window sticker identifying 
               the equipment provided with the vehicle, or if none, 








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               located prominently and conspicuously on the vehicle.

             c)   Contain the information used to determine the reasonable 
               market value, including, but not limited to, use of a 
               nationally recognized pricing guide for used vehicles, and 
               the date the reasonable market value was determined.

             d)   Indicate that the reasonable market value is being 
               provided only for comparison shopping and is not the retail 
               sale price or the advertised price of the vehicle.

          4)Requires a buy-here-pay-here dealer to provide to a 
            prospective buyer a copy of any information obtained from a 
            nationally recognized pricing guide that the dealer used to 
            determine the reasonable market value of the vehicle.

          5)Defines "nationally recognized pricing guide" as including, 
            but not limited to, the Kelley Blue Book, Edmunds, the Black 
            Book, or the National Automobile Dealers' Association (NADA) 
            Guide.
           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee:

          1)Minor ongoing special fund costs (around $35,000) to the 
            Department of Motor Vehicles (DMV) for additional enforcement.

          2)Minor additional costs to the courts associated with 
            violations of the bills requirements, which constitute an 
            infraction.
           
          COMMENTS  :  The author explains that the bill is needed to 
          protect consumers from predatory sales practices reportedly 
          employed by unscrupulous used car dealers, particularly those of 
          the so-called "buy here, pay here" variety.  This bill defines a 
          "buy-here-pay-here" dealer to mean a seller who enters into 
          conditional sale contracts or lease contracts, and who does not 
          routinely assign those contracts to an unaffiliated third-party 
          finance or leasing source.  This definition is consistent with 
          the definition employed by two other pending pieces of 
          legislation, and appears to closely reflect the federal 
          definition of buy-here-pay-here dealers recently enacted as part 
          of the Dodd-Frank Wall Street Reform and Consumer Protection Act 
          (Public Law 111-203).  









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          This bill applies only to buy-here-pay-here dealers, as defined, 
          and requires these auto dealers to affix a label to every used 
          car for sale that states the reasonable market value of the 
          vehicle, as determined within the last 60 days by a nationally 
          recognized pricing guide (e.g., Edmunds or Kelley Blue Book).  
          Unlike new cars, which since 1958 have been required to display 
          a manufacturer's suggested retail price (MSRP) sticker, there is 
          no such requirement for used cars.  This disparity, the author 
          contends, allows some dealers to set the price for a car based 
          on information determined after running the customer's credit 
          report, or otherwise drastically overprice a used vehicle for 
          low-income consumers who cannot afford a new car but are 
          particularly compelled to obtain a car for everyday needs.  
          According to the author, a label displaying the reasonable 
          market value of the vehicle will help protect consumers from 
          unfair pricing.

          CarMax Auto Superstores continues to oppose the bill, writing:  
          "As a vehicle sits on a dealer's lot, it depreciates.  Thus the 
          'reasonable market value' on the sticker will likely be 
          superficially higher than the actual value of the vehicle as the 
          30-day time frame provided in the bill accrues.  Instead of 
          helping consumers, the label required by this bill will mislead 
          them."  The author recently amended the bill to establish a 
          60-day time frame for which the reasonable market value may be 
          displayed, instead of the previous 30-day time frame.  In 
          addition, this bill requires the label to indicate that the 
          reasonable market value is being provided only for comparison 
          shopping and is not the retail sale price or the advertised 
          price of the vehicle.

          In support of the bill, Consumer Action reports that it 
          "receives numerous complaints from car buyers who needlessly 
          overpay by thousands of dollars because they trust the verbal 
          promises of car salesmen who assure the buyer that the vehicle 
          is fairly priced.  Only after the sale do they learn that the 
          dealer's pricing was far higher than the vehicle's genuine 
          value."  Proponents contend that this bill offers a reasonable 
          solution to help protect consumers against abusive pricing 
          practices by buy-here-pay-here dealers, especially in situations 
          where the consumer has no third-party information to compare to 
          an asking price represented by the dealer to be fair. 
           









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          Analysis Prepared by  :    Anthony Lew / JUD. / (916) 319-2334 
                                                                FN: 0003875