BILL ANALYSIS �
AB 791
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 791 (Hagman)
As Amended August 13, 2013
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |77-0 |(May 29, 2013) |SENATE: |39-0 |(August 26, |
| | | | | |2013) |
-----------------------------------------------------------------
Original Committee Reference: B., P. & C.P.
SUMMARY : 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 as specified, and also authorizes
a repossessor to wear certain identification, as specified.
Specifically, this bill :
1)Prohibits a licensed repossession agency (LRA) or its
registrants from making a demand for payment in lieu of
repossession.
2)Prohibits a LRA from publicly disclosing, without a court
order, the residential address, residential 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, unless otherwise
provided by law.
3)Authorizes a licensed repossessor to wear a badge, cap
insignia, if it includes all of the following:
a) All or a substantial part of the LRA's name;
b) The BSIS-issued license number; and,
c) The word "repossessor."
4)Requires all badges, cap insignias, worn by a repossessor to
be a standard design approved by Bureau of Security and
Investigative Services (BSIS) and clearly visible. These
provisions do not apply to repossessors working under a
temporary registration.
AB 791
Page 2
5)Prohibits a repossessor from wearing a badge on his or her
belt.
The Senate amendments :
1)Clarify that an LRA is not prohibited from the removal of a
locking mechanism or security device on the collateral,
before, during or after a repossession.
2)Eliminate the requirement that a temporary registration be
embossed by the BSIS with the state seal.
3)State that repossession of collateral subject to registration
is complete if any of the following occurs:
a) The repossessor moves the entire collateral present; or,
b) The repossessor gains control of the collateral.
4)State that selling recovered collateral, as specified, or
making demand for payment in lieu of repossession is
punishable by a fine of $250 for the first violation and
$1,000 for each subsequent violation.
5)Clarify that a repossession agency may not disclose to the
public specified information about any qualified certificate
holder or qualified manager that it employs without court
order.
6)Authorize a qualified certificate holder and qualified
manager, in addition to other LRA individuals, to wear a
jacket patch if it includes the repossession agency license
number as specified.
7)Replace the word "label" with "patch."
8)Allow specified individuals to wear an oval, shield, round,
square, or non-seven-point badge, cap insignia, or jacket
patch as specified.
9)Prohibit a repossessor from wearing a badge around his or her
neck.
10)Authorize the BSIS to assess a fine of $100 for the first
AB 791
Page 3
violation of specified badge, cap insignia and patch
identification requirements, $175 for the second violation and
$250 for each subsequent violation.
11)Make minor and technical changes.
12)State that no reimbursement is required by this bill pursuant
to Section 6 of Article XIIIB of the California Constitution
because the only costs that may be incurred by a local agency
or a school district will be incurred because this bill
creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction
within the meaning of Section 17556 of the Government Code, or
changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
FISCAL EFFECT According to the Senate Appropriations Committee:
1)Investigation and enforcement: The Department of Consumer
Affairs anticipates that this bill will increase investigation
and enforcement workload for the 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.
2)Fines: Likely minor revenue increase to the BSIS from the
increased fine amounts and new penalties established by this
bill.
COMMENTS :
1)Purpose of this bill . This bill aims to provide additional
protections for both consumers and licensed repossessors by
revising the Collateral Recovery Act which governs how
repossessors may legally recover collateral property on behalf
of creditors. Those revisions include a prohibition on
repossessors accepting payment on behalf of creditors - either
by selling the seized collateral, or demanding payment in lieu
of repossession - and then transmitting those payments to the
creditor. This bill would also prohibit LRAs from publicly
disclosing personal employee information without a court
order, and authorize a repossessor to wear a badge, insignia,
or jacket patch, as specified. This bill is sponsored by the
California Association of Licensed Repossessors (CALR).
AB 791
Page 4
2)The profession of repossession . When a debtor defaults on
payments for a home, vehicle, or product, the creditor is
authorized to collect and resell the collateral to defray the
delinquent amount owed by the debtor. Under existing law, a
creditor may use a collections agency to recover loan payments
in default from customers, and if that is unsuccessful, a
creditor may hire a LRA to recover viable collateral for
resale, with the proceeds going towards the outstanding loan
amount.
A substantial portion of repossessions involve vehicles
because of their relatively high value, the ease of resale and
the ability to repossess vehicles without home entry or
permission since they are usually parked outside.
3)Banning the sale of collateral . Currently, once repossessors
recover collateral they usually deliver it to an auctioneer to
sell at fair market value. The proceeds of repossessed
collateral, minus the costs for repossession and resale, are
then deducted from a debtor's outstanding balance owed to a
creditor. While the majority of repossessed vehicles are sold
at auction, a repossessor currently may personally sell the
collateral if the creditor authorizes such a sale in the
repossessor's contract.
The sponsor contends that this practice is problematic because
it does not guarantee that a repossessed vehicle will be sold
at fair market value because a repossessor's sale is not
subject to the same public bidding requirements as an auction.
This bill simply prohibits a repossessor from selling
collateral.
4)Banning collection in lieu of repossession . Under current
law, creditors can contractually require repossessors to
attempt to collect payment from a debtor prior to the seizure
of collateral during an unannounced repossession attempt.
However, if a debtor contests the repossession, the
repossessor cannot collect payment or repossess the vehicle.
Alternatively, a repossessor is allowed to seize a vehicle
without the debtor's knowledge or consent by simply seizing a
vehicle that is publicly accessible (usually parked on the
street or in the driveway). Once the vehicle is hitched to
the repossessor's tow truck, repossession is technically
complete and a debtor cannot stop the repossessor from driving
AB 791
Page 5
away with the vehicle. If a debtor wants the vehicle back,
the debtor must contact the creditor to work out a financial
arrangement.
This bill would prohibit repossessors from collecting payment
from debtors because their expertise lies in property seizure.
5)Banning disclosure of an employee's personal information . The
qualifying manager of a LRA is financially liable for employee
negligence, such as any damage caused in the course of
repossessing a vehicle. Repossessors who damage vehicles may
be fired or released from service, but the LRAs may still
experience an increase in their insurance premiums and
deductibles. According to the sponsor, a LRA might retaliate
against a former employee by informing a debtor whose vehicle
was repossessed how to locate that former employee by
disclosing personal information that debtors might use to
track a repossessor down and retaliate. This bill would
prohibit the disclosure of personal information without a
court order to protect the safety of a repossessor in the
performance of duties.
6)Authorization to wear badges, insignia, and labels .
Currently, repossessors are prohibited from using any
identification other than the BSIS-issued registration card.
The sponsor contends that the lack of obvious official
identification has presented problems with debtors who see an
individual dressed in plain clothes repossessing their vehicle
and believe the repossessor is stealing it. This can result
in a dangerous situation if the debtor resorts to violence to
defend his or her property from a supposed thief.
The sponsor believes that authorization to voluntarily wear
badges, insignia, or jacket patches identifying the LRA's
name, license number and role as a repossessor will help
consumers visually identify a licensed repossessor for LRAs
that choose to identify themselves in that manner. These
uniform provisions were modeled after the uniform requirements
of security guards, who are also licensed by BSIS.
Analysis Prepared by : Elissa Silva / B., P. & C.P. / (916)
319-3301
AB 791
Page 6
FN: 0001977