BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1534|
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THIRD READING
Bill No: AB 1534
Author: Wieckowski (D), et al.
Amended: 8/24/12 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-2, 7/3/12
AYES: Evans, Corbett, Leno
NOES: Harman, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/16/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 42-32, 5/29/12 - See last page for vote
SUBJECT : Used vehicle sales: labeling requirements
SOURCE : Author
DIGEST : This bill requires a buy-here-pay-here dealer to
affix a label on any used vehicle being offered for retail
sale that states the reasonable market value of that
vehicle. A violation of this provision would be an
infraction.
Senate Floor Amendments of 8/22/12 (1) conform definition
of "buy-here-pay-here" dealer to the definition contained
in AB 1447 and SB 956 and (2) make a typographical change.
ANALYSIS : Existing law requires all car dealers to
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provide a document indicating the price of specified items
purchased (including, among other things, any service
contract, insurance product, debt cancellation agreement,
or theft deterrent device) and stating the cost of the
monthly installment payments with and without the items
listed. A dealer is prohibited from adding charges to the
contract without full disclosure and consent of the
purchaser. (Civil Code Sec. 2982.2.)
Existing federal regulation requires used car dealers,
before offering a used vehicle for sale to a consumer, to
display a window sticker called the "Buyer's Guide" that
must make several disclosures, including, among other
things:
A list of the fourteen major systems of an automobile and
defects that can occur in these systems;
A suggestion that consumers ask the dealer if a
pre-purchase inspection is permitted; and
A warning against reliance on spoken promises that are
not confirmed in writing.
Existing federal regulation requires the "Buyer's Guide" to
disclose whether any warranty is offered and the basic
terms of any warranty, and if no express warranty is
provided, then the Buyer's Guide must indicate that the
vehicle is being offered for sale "as is" (with no express
or implied warranties), or with only the applicable
"implied warranties" required by state law. Existing
federal regulation further requires the dealer, at the time
of sale, to give the buyer the original Buyer's Guide
displayed on the vehicle or an accurate copy that in either
case contains all of the required disclosures and reflects
the final warranty terms agreed on between the buyer and
seller.
Existing federal law requires manufacturers of new
automobiles, prior to the delivery of any new automobile to
any dealer, to securely affix to the vehicle a label that
discloses specified information, including the following:
The retail price of such automobile suggested by the
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manufacturer (MSRP);
The retail-delivered price suggested by the manufacturer
for each accessory or item of optional equipment,
physically attached to such automobile at the time of its
delivery to such dealer, which is not already included
within the MSRP stated; and
The amount charged, if any, to such dealer for the
transportation of such automobile to the location at
which it is delivered to such dealer.
This bill requires a buy-here-pay-here (BHPH) dealer to
affix a label on any used vehicle being offered for retail
sale that states the reasonable market value of that
vehicle. That label must meet the following conditions:
Be in writing;
Be printed with a heading that reads "REASONABLE MARKET
VALUE OF THIS VEHICLE" in at least 16-point type and text
in at least 12-point type;
Be located adjacent to the window sticker identifying the
equipment provided with the vehicle or, if none, it shall
be located prominently and conspicuously on the vehicle
so that it is readily readable;
Contain the information used to determine the reasonable
market value of the vehicle, including, but not limited
to, the use of a nationally recognized pricing guide for
used vehicles;
Contain the date the reasonable market value was
determined; and
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.
This bill requires a BHPH dealer to provide a prospective
buyer with a copy of any information obtained from a
nationally recognized pricing guide that the dealer used to
determine the reasonable market value.
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This bill defines "reasonable market value" as the average
retail value of a used vehicle 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, as specified.
This bill defines "nationally recognized pricing guide" as
including, but not limited to, the Kelley Blue Book (KBB),
Edmunds, the Black Book, or the National Automobile
Dealers' Association (NADA) Guide.
This bill defines "buy-here-pay-here dealer" as a seller
who:
Enters into conditional sales contracts and assigns less
than 90 percent of unrescinded contracts within 45 days
of consummation.
Exempts specified dealers from the definition and allow
the Department of Motor Vehicles to promulgate
regulations as necessary or appropriate to implement the
definition.
This bill provides that notwithstanding the above
definition, a seller is not a BHPH dealer if the seller
does both of the following:
Certifies 100 percent of its vehicles, as specified; and
Maintains an on-site service and repair facility that is
licensed by the Bureau of Automotive Repair and employs a
minimum of five master automobile technicians who are
certified by the National Institute for Automotive
Service Excellence.
Related Legislation
SB 956 (Lieu), 2012, would enact the Buy-Here-Pay-Here
Automobile Dealers Act, as specified, to regulate contract
terms and other activities of entities meeting the
definition of buy here pay here automobile dealers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: Yes
According to the Senate Appropriations Committee:
Increased enforcement costs of $91,000 (Motor Vehicle
Account) to the Department of Motor Vehicles in 2012-13;
ongoing costs of $157,000 thereafter.
Minor ongoing costs to the Judicial Branch of less than
$10,000 (General Fund) annually for 100 new infraction
filings, offset to a degree by fine revenue.
SUPPORT : (Verified 8/22/12)
Center for Responsible Lending
City of Palmdale
Consumer Action
Consumer Federation of California
Consumers for Auto Reliability and Safety
Silicon Valley Community Foundation
OPPOSITION : (Verified 8/24/12)
California Chamber of Commerce
City of Palmdale
Independent Automobile Dealers Association of California
Tricolor Auto Group
ARGUMENTS IN SUPPORT : According to the author:
"Buy Here, Pay Here" lots comprise a growing segment
of the used car industry, specializing in high
interest vehicle loans for people with poor credit.
These dealers prey on vulnerable customers by charging
exorbitant interest rates on overpriced, high mileage
cars. They combine abusive and predatory lending and
pricing practices with harsh default terms and swift
repossession practices. In today's economy millions
of Americans find themselves in desperate need of a
car simply to keep their job. With the combination of
overpriced vehicles and unregulated interest rates,
customers can end up paying up to 10 times the fair
market value of the cars - if they are even able to
continue making payments before the car dies.
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Consumers for Auto Reliability and Safety contends that:
ŬAB 1534] will provide crucial information in a timely
fashion, where it is likely to be useful - on the
vehicle itself. Such pricing has been required on
new cars since the 1950's, in the form of the Monroney
sticker, and has improved transparency in the sales of
new cars.
ARGUMENTS IN OPPOSITION : The Independent Automobile
Dealers Association of California, in opposition, argues
that: "Ŭa]uto valuations are estimates based on
statistical information obtained from a variety of sources.
It needs to be pointed out that each valuation provider
disclaims its information as being an estimate or guide
only. To mandate placement of a valuation in a car only
serves to mislead the consumer. It says that the State of
California has determined that the most important thing you
need to know is the retail value. Factors that should
first be considered that are never part of the valuation
process are maintenance, title history, actual mechanical
and overall condition based on an inspection by a
professional."
The California Chamber of Commerce, in opposition,
expresses similar concerns, asserts that the labeling
requirement is a burden for vehicle dealers, and contends
that "Ŭa]ppraisals could reasonably vary outside the range
set by a national pricing guide, but still accurately
reflect the value of the vehicle, yet AB 1534 would subject
a dealer to liability regardless."
Tricolor Auto Group, in opposition, expresses further
concern that: (1) the bill was initially drafted to apply
to all dealers selling used cars but amended to only
include buy-here-pay-here dealers, thus, giving independent
deals a competitive advantage; and (2) buy-here-pay-here
dealers "will now be motivated to sell lower quality cars
so that they can achieve a more favorable cost basis
relative to the declared FMV."
ASSEMBLY FLOOR : 42-32, 5/29/12
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AYES: Alejo, Allen, Ammiano, Atkins, Blumenfield, Bonilla,
Bradford, Brownley, Butler, Charles Calderon, Campos,
Carter, Davis, Dickinson, Eng, Feuer, Fong, Fuentes,
Furutani, Gatto, Gordon, Hayashi, Roger Hernández, Hill,
Huffman, Lara, Bonnie Lowenthal, Ma, Mitchell, Monning,
Pan, Perea, V. Manuel Pérez, Portantino, Skinner,
Solorio, Swanson, Torres, Wieckowski, Williams, Yamada,
John A. Pérez
NOES: Achadjian, Bill Berryhill, Block, Buchanan, Chesbro,
Conway, Cook, Donnelly, Beth Gaines, Galgiani, Garrick,
Gorell, Grove, Hagman, Halderman, Harkey, Huber,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Beall, Cedillo, Fletcher, Hall, Hueso,
Mendoza
RJG:n 8/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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