BILL ANALYSIS Ó
AB 1534
Page 1
ASSEMBLY THIRD READING
AB 1534 (Wieckowski)
As Amended May 21, 2012
Majority vote
JUDICIARY 6-3 APPROPRIATIONS 12-5
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|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 |
| | | | |
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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