BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 791
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 791 (Hagman)
          As Amended  August 13, 2013
          Majority vote
           
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          |ASSEMBLY:  |77-0 |(May 29, 2013)  |SENATE: |39-0 |(August 26,    |
          |           |     |                |        |     |2013)          |
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           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. 








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          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  








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            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).









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           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  








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            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 










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