BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 791 (Hagman) - Collateral Recovery: Repossessors
Amended: August 13, 2013 Policy Vote: Business &
Professions 10-0
Urgency: No Mandate: No
Hearing Date: August 19, 2013
Consultant: Jacqueline Wong-Hernandez
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 791 prohibits a repossessor from selling
repossessed collateral or accepting payment from a debtor in
lieu of repossession, forbids a repossession agency from
disclosing personal employee information, authorizes a
repossessor to wear specified identification, establishes fines
for violations, and expands the criteria for completion of a
repossession.
Fiscal Impact:
Investigation and enforcement: The Department of
Consumer Affairs (DCA) anticipates that this bill will
increase investigation and enforcement workload for the
Bureau of Security and Investigative Services (BSIS),
which will require an additional $39,000 (Special Fund)
ongoing for a .5 Associate Governmental Program Analyst,
as well as minor additional travel costs.
Fines: Likely minor revenue increase to the BSIS from
the increased fine
amounts and new penalties established by this bill.
Background: Existing state law defines a "repossession agency"
to include any person who engages in business or accepts
employment to locate or recover collateral, whether voluntarily
or involuntarily, which is subject to a security agreement; a
"repossessor's tow vehicle" to mean a tow vehicle which is
registered to a licensed repossessor that is used exclusively in
the course of the repossession business (Vehicle Code Section
615); and a "security agreement" to mean an obligation, pledge,
mortgage, chattel mortgage, lease agreement, deposit, or lien,
given by a debtor as security for payment or performance of his
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or her debt, by furnishing the creditor with recourse to be used
in case of failure in the principal obligation. (Business and
Professions Code � 7500.1)
The licensing and regulation of repossession agencies,
repossessors, and repossessor qualified managers is administered
by the BSIS under the DCA. The Collateral Recovery Act (Act)
governs collateral repossessions by a legal owner, lienholder,
lessor or lessee, or the agent of any of them based on written
authorization and a security agreement, and it:
1)Specifies that the Act does not prohibit using or taking
personal effects that are connected, adjoined, or affixed to
the collateral.
2)Provides that until a repossessor registration certificate is
issued or denied, a person may be assigned to work with a
temporary registration on a secure form that has been embossed
by BSIS with the state seal.
3)Authorizes a repossessor to sell collateral with the written
authorization from the legal owner of the collateral, and
specifies how the sale proceeds shall be remitted to the legal
owner.
4)Authorizes BSIS to fine the repossessor, as specified, for
failing to remit money from the sale of the collateral to the
legal owner, as specified.
5)Authorizes a licensed repossession agency (LRA) or its
employees to demand payment in lieu of repossession, if the
demand is made pursuant to an assignment for repossession in
accordance with the state Rosenthal Fair Debt Collection Act.
6)Specifies that vehicle repossession is complete when the
repossessor gains entry to the collateral or when the
collateral becomes connected to the repossessor's tow vehicle.
Prohibits any person other than the legal owner to direct a
repossessor to release a vehicle without the legal authority
to do so.
7)Authorizes BSIS to assess a $25 fine against a repossessor who
uses any identification to indicate registration as a
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repossessor except an employer BSIS-approved identification
card issued by the LRA.
8)Prohibits an LRA or its employees from false or misleading
representation during the recovery of collateral, including
the implication that the individual is vouched for, bonded by,
or affiliated with the United States or with any state,
county, city, or city and county, including the use of any
badge, uniform, or facsimile thereof. Authorizes BSIS to
issue a warning notice for the first violation, a $25 fine for
the second violation, and a $100 fine for any subsequent
violation. (BCP � 7500 et seq.)
Proposed Law: AB 791 makes numerous changes to the Collateral
Recovery Act. Specifically, this bill:
1) Specifies that the Act does not prohibit the removal of
a locking mechanism or security device on the collateral,
before, during, or after a repossession.
2) Deletes the requirement that a temporary registration
card must be embossed by the BSIS with the State Seal,
thereby better enabling BSIS to implement its new DCA
licensing and enforcement system.
3) Prohibits a repossessor from selling repossessed
collateral, and authorizes the BSIS to fine the repossessor
$250 for the first violation and $1,000 for each subsequent
violation.
4) Revises the definition of when a vehicle repossession is
complete to also include when the repossessor moves the
entire collateral present, pushes the collateral, or gains
control of the collateral.
5) Prohibits an LRA or its registrants from making a demand
for payment in lieu of repossession.
6) Includes the registrant's name, the licensee's name and
address, and the license number amongst other information
on the application that shall be treated as confidential
pursuant to the Information Practices Act of 1977.
7) Prohibits an LRA from publicly disclosing, without a
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court order, the residential address or telephone number,
cellular phone number, driver's license number, work
schedule, location at any point in time, or any other
personal information for any licensee, registrant, employee
or independent contractor that it employs.
8) Authorizes a licensee, officer, director, partner,
manager, independent contractor, qualified certificate
holder, qualified manager, or employee of a repossession
agency to wear an oval, shield, round, square, or non-seven
point badge, cap insignia, or jacket patch if it includes
specified information.
9) Authorizes the BSIS to fine an LRA $100 for the first
violation, $175 for a second violation, and $250 for each
subsequent violation of the provisions related to
identification requirements.
Staff Comments: This bill makes numerous changes to the
Collateral Recovery Act; some are clarifying, but others are
substantive shifts in the requirements and prohibitions relative
to LRAs. This bill also creates new penalties (fines) and
increases certain existing penalties. Nothing in this bill will
necessarily drive increased violations and enforcement
activities, but the bill's changes to statute could increase
violations since it expands prohibited activities. The extent to
which new workload would be created is unknown, and will depend
on the actions of LRAs (compliance level) and consumers (number
of complaints lodged).
The DCA anticipates that this bill will result in increased
investigation and enforcement workload for the BSIS. The agency
anticipates requiring an additional half-time staff person, for
an annual cost for $39,000 (Special Fund) and minor travel costs
for that employee, both of which will be covered by LRA
licensing fees. To the extent that increased enforcement results
in greater penalties paid for violations, there will be a
revenue increase to the BSIS.