Amended in Senate June 15, 2014

Amended in Assembly April 10, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 1732


Introduced by Assembly Member Stone

February 14, 2014


An act to amend Sections 11713, 11713.1, and 11713.16 of the Vehicle Code, relating to vehicles.

LEGISLATIVE COUNSEL’S DIGEST

AB 1732, as amended, Stone. Vehicles: manufacturers, distributors, and dealers.

Existing law generally requires a manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to be licensed by the Department of Motor Vehicles. Existing law prohibits these licenseesbegin delete from engaging in certain practices, including,end deletebegin insert from, among other things,end insert failing to, within 48 hours, withdraw in writing an advertisement of a vehicle that has been sold or withdrawn from sale and advertising or representing a vehicle as a new vehicle if the vehicle is a used vehicle. Existing law makes it a crime to violate these provisions.

This bill wouldbegin delete additionallyend deletebegin insert remove the requirement that the withdrawal of the advertisement be in writing, provide that the advertisement withdrawal requirement apply to authorized advertisements, and provide an exception to withdrawal if the advertisement includes an expiration date that occurs less than 48 hours after the sale or withdrawal from sale, or the print advertisement is amended to conspicuously denote that the vehicle has been sold. The bill wouldend insert prohibit a licensee from advertising a vehicle’s prior use or ownership history in an inaccurate manner. By expanding the scope of a crime, the bill would impose a state-mandated local program.

Existing law makes it a violation for the holder of a dealer’s license to, among other things, use “rebate” or similar words in advertising the sale of a vehicle unless the rebate is expressed in a specified dollar amount and is in fact a rebate offered by the vehicle manufacturer or distributor. Existing law also makes it a violation to advertise as the total sales price of a vehicle an amount that includes a deduction from a rebate, except as specified.

This bill would additionally authorize the use of “rebate” if the rebate meets the requirements described above and is offered by a finance company affiliated with a vehicle manufacturer or distributor, a regulated utility, or abegin delete governmentend deletebegin insert governmentalend insert entity. The bill would also prohibit a dealer from advertising a rebate reduction that conflicts with another advertised rebate deduction. By expanding the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 11713 of the Vehicle Code is amended
2to read:

3

11713.  

A holder of a license issued under this article shall not
4do any of the following:

5(a) Make or disseminate, or cause to be made or disseminated,
6before the public in this state, in a newspaper or other publication,
7or an advertising device, or by public outcry or proclamation, or
8in any other manner or means whatever, a statement that is untrue
9or misleading and that is known, or that by the exercise of
10reasonable care should be known, to be untrue or misleading; or
11to so make or disseminate, or cause to be so disseminated, a
12statement as part of a plan or scheme with the intent not to sell a
P3    1vehicle or service so advertised at the price stated therein, or as so
2advertised.

3(b) (1) (A) Advertise or offer for sale or exchange in any
4manner, a vehicle not actually for sale at the premises of the dealer
5or available to the dealer directly from the manufacturer or
6distributor of the vehicle at the time of the advertisement or offer.
7However, a dealer who has been issued an autobroker’s
8endorsement to his or her dealer’s license may advertise his or her
9service of arranging or negotiating the purchase of a new motor
10vehicle from a franchised new motor vehicle dealer and may
11specify the line-makes and models of those new vehicles.
12Autobrokering service advertisements may not advertise the price
13or payment terms of a vehicle and shall disclose that the advertiser
14is an autobroker or auto buying service, and shall clearly and
15conspicuously state the following: “All new cars arranged for sale
16are subject to price and availability from the selling franchised
17new car dealer.”

18(B) As to printed advertisements, the disclosure statement
19required by subparagraph (A) shall be printed in not less than
2010-point bold type size and shall be textually segregated from the
21other portions of the printed advertisement.

22(2) Notwithstanding subparagraph (A), classified advertisements
23for autobrokering services that measure two column inches or less
24are exempt from the disclosure statement in subparagraph (A)
25pertaining to price and availability.

26(3) Radio advertisements of a duration of less than 11 seconds
27that do not reference specific line-makes or models of motor
28vehicles are exempt from the disclosure statement required in
29subparagraph (A).

30(c) Fail, within 48 hours, to withdrawbegin delete in writingend delete anbegin insert authorizedend insert
31 advertisement of a vehicle that has been sold or withdrawn from
32begin delete sale.end deletebegin insert sale, unless the advertisement includes an expiration date
33that occurs less than 48 hours after the sale or withdrawal from
34sale, or the print advertisement is amended to conspicuously denote
35that the vehicle has been sold.end insert

36(d) Advertise or represent a vehicle as a new vehicle if the
37vehicle is a used vehicle.

38(e) Engage in the business for which the licensee is licensed
39without having in force and effect a bond as required by this article.

P4    1(f) Engage in the business for which the dealer is licensed
2without at all times maintaining an established place of business
3as required by this code.

4(g) Include, as an added cost to the selling price of a vehicle,
5an amount for licensing or transfer of title of the vehicle, which is
6not due to the state unless, prior to the sale, that amount has been
7paid by a dealer to the state in order to avoid penalties that would
8have accrued because of late payment of the fees. However, a
9dealer may collect from the second purchaser of a vehicle a
10prorated fee based upon the number of months remaining in the
11registration year for that vehicle, if the vehicle had been previously
12sold by the dealer and the sale was subsequently rescinded and all
13the fees that were paid, as required by this code and Chapter 2
14(commencing with Section 10751) of Part 5 of Division 2 of the
15Revenue and Taxation Code, were returned to the first purchaser
16of the vehicle.

17(h) Employ a person as a salesperson who has not been licensed
18pursuant to Article 2 (commencing with Section 11800), and whose
19license is not displayed on the premises of the dealer as required
20by Section 11812, or willfully fail to notify the department by mail
21within 10 days of the employment or termination of employment
22of a salesperson.

23(i) Deliver, following the sale, a vehicle for operation on
24California highways, if the vehicle does not meet all of the
25equipment requirements of Division 12 (commencing with Section
2624000). This subdivision does not apply to the sale of a leased
27vehicle to the lessee if the lessee is in possession of the vehicle
28immediately prior to the time of the sale and the vehicle is
29registered in this state.

30(j) Use, or permit the use of, the special plates assigned to him
31or her for any purpose other than as permitted by Section 11715.

32(k) Advertise or otherwise represent, or knowingly allow to be
33advertised or represented on behalf of, or at the place of business
34of, the licenseholder that no downpayment is required in connection
35with the sale of a vehicle when a downpayment is in fact required
36and the buyer is advised or induced to finance the downpayment
37by a loan in addition to any other loan financing the remainder of
38the purchase price of the vehicle. The terms “no downpayment,”
39“zero down delivers,” or similar terms shall not be advertised
P5    1unless the vehicle will be sold to a qualified purchaser without a
2prior payment of any kind or trade-in.

3(l) Participate in the sale of a vehicle required to be reported to
4the Department of Motor Vehicles under Section 5900 or 5901
5without making the return and payment of the full sales tax due
6and required by Section 6451 of the Revenue and Taxation Code.

7(m) Permit the use of the dealer’s license, supplies, or books by
8any other person for the purpose of permitting that person to engage
9in the purchase or sale of vehicles required to be registered under
10this code, or permit the use of the dealer’s license, supplies, or
11books to operate a branch location to be used by any other person,
12whether or not the licensee has any financial or equitable interest
13or investment in the vehicles purchased or sold by, or the business
14of, or branch location used by, the other person.

15(n) Violate any provision of Article 10 (commencing with
16Section 28050) of Chapter 5 of Division 12.

17(o) Sell a previously unregistered vehicle without disclosing in
18writing to the purchaser the date on which a manufacturer’s or
19distributor’s warranty commenced.

20(p) Accept a purchase deposit relative to the sale of a vehicle,
21unless the vehicle is present at the premises of the dealer or
22available to the dealer directly from the manufacturer or distributor
23of the vehicle at the time the dealer accepts the deposit. Purchase
24deposits accepted by an autobroker when brokering a retail sale
25shall be governed by Sections 11736 and 11737.

26(q) Consign for sale to another dealer a new vehicle.

27(r) Display a vehicle for sale at a location other than an
28established place of business authorized by the department for that
29dealer or display a new motor vehicle at the business premises of
30another dealer registered as an autobroker. This subdivision does
31not apply to the display of a vehicle pursuant to subdivision (b) of
32Section 11709 or the demonstration of the qualities of a motor
33vehicle by way of a test drive.

34(s) Use a picture in connection with an advertisement of the
35price of a specific vehicle or class of vehicles, unless the picture
36is of the year, make, and model being offered for sale. The picture
37shall not depict a vehicle with optional equipment or a design not
38actually offered at the advertised price.

39(t) Advertise for sale a vehicle that was used by the selling
40licensee in its business as a demonstrator, executive vehicle, service
P6    1vehicle, rental, loaner, or lease vehicle, unless the advertisement
2clearly and conspicuously discloses the previous use made by that
3licensee of the vehicle. An advertisement shall not describe any
4of those vehicles as “new.”

17 5(u)  Advertise the prior use or ownership history of a vehicle in
6an inaccurate manner.

7

SEC. 2.  

Section 11713.1 of the Vehicle Code is amended to
8read:

9

11713.1.  

It is a violation of this code for the holder of a dealer’s
10license issued under this article to do any of the following:

11(a) Advertise a specific vehicle for sale without identifying the
12vehicle by its model, model-year, and either its license number or
13that portion of the vehicle identification number that distinguishes
14the vehicle from all other vehicles of the same make, model, and
15model-year. Model-year is not required to be advertised for current
16model-year vehicles. Year models are no longer current when
17ensuing year models are available for purchase at retail in
18California. An advertisement that offers for sale a class of new
19vehicles in a dealer’s inventory, consisting of five or more vehicles,
20that are all of the same make, model, and model-year is not required
21to include in the advertisement the vehicle identification numbers
22or license numbers of those vehicles.

23(b) Advertise the total price of a vehicle without including all
24costs to the purchaser at time of sale, except taxes, vehicle
25registration fees, the California tire fee, as defined in Section 42885
26of the Public Resources Code, emission testing charges not
27exceeding fifty dollars ($50), actual fees charged for certificates
28pursuant to Section 44060 of the Health and Safety Code, finance
29charges, and any dealer document processing charge or charge to
30electronically register or transfer the vehicle.

31(c) (1) Exclude from an advertisement of a vehicle for sale that
32there will be added to the advertised total price at the time of sale,
33charges for sales tax, vehicle registration fees, the California tire
34fee, the fee charged by the state for the issuance of a certificate of
35compliance or noncompliance pursuant to a statute, finance
36charges, a charge to electronically register or transfer the vehicle,
37and a dealer document processing charge.

38(2) The obligations imposed by paragraph (1) are satisfied by
39adding to the advertisement a statement containing no abbreviations
40and that is worded in substantially the following form: “Plus
P7    1government fees and taxes, any finance charges, any dealer
2document processing charge, any electronic filing charge, and any
3emission testing charge.”

4(3) For purposes of paragraph (1), “advertisement” means an
5advertisement in a newspaper, magazine, or direct mail publication
6that is two or more columns in width or one column in width and
7more than seven inches in length, or on a Web page of a dealer’s
8Internet Web site that displays the price of a vehicle offered for
9sale on the Internet, as that term is defined in paragraph (6) of
10subdivision (f) of Section 17538 of the Business and Professions
11Code.

12(d) Represent the dealer document processing charge, electronic
13registration or transfer charge, or emission testing charge, as a
14governmental fee.

15(e) Fail to sell a vehicle to a person at the advertised total price,
16exclusive of taxes, vehicle registration fees, the California tire fee,
17the fee charged by the state for the issuance of a certificate of
18compliance or noncompliance pursuant to a statute, finance
19charges, mobilehome escrow fees, the amount of a city, county,
20or city and county imposed fee or tax for a mobilehome, a dealer
21document processing charge, an electronic registration or transfer
22charge, and a charge for emission testing not to exceed fifty dollars
23($50) plus the actual fees charged for certificates pursuant to
24Section 44060 of the Health and Safety Code, while the vehicle
25remains unsold, unless the advertisement states the advertised total
26price is good only for a specified time and the time has elapsed.
27Advertised vehicles shall be sold at or below the advertised total
28price, with statutorily permitted exclusions, regardless of whether
29the purchaser has knowledge of the advertised total price.

30(f) (1) Advertise for sale, sell, or purchase for resale a new
31vehicle of a line-make for which the dealer does not hold a
32franchise.

33(2) This subdivision does not apply to a transaction involving
34the following:

35(A) A mobilehome.

36(B) A recreational vehicle as defined in Section 18010 of the
37Health and Safety Code.

38(C) A commercial coach, as defined in Section 18001.8 of the
39Health and Safety Code.

P8    1(D) An off-highway motor vehicle subject to identification as
2defined in Section 38012.

3(E) A manufactured home.

4(F) A new vehicle that will be substantially altered or modified
5by a converter prior to resale.

6(G) A commercial vehicle with a gross vehicle weight rating of
7more than 10,000 pounds.

8(H) A vehicle purchased for export and exported outside the
9territorial limits of the United States without being registered with
10the department.

11(I) A vehicle acquired in the ordinary course of business as a
12new vehicle by a dealer franchised to sell that vehicle, if all of the
13following apply:

14(i) The manufacturer or distributor of the vehicle files a
15bankruptcy petition.

16(ii) The franchise agreement of the dealer is terminated,
17canceled, or rejected by the manufacturer or distributor as part of
18the bankruptcy proceedings and the termination, cancellation, or
19rejection is not a result of the revocation by the department of the
20dealer’s license or the dealer’s conviction of a crime.

21(iii) The vehicle is held in the inventory of the dealer on the
22date the bankruptcy petition is filed.

23(iv) The vehicle is sold by the dealer within six months of the
24date the bankruptcy petition is filed.

25(3) Subparagraph (I) of paragraph (2) does not entitle a dealer
26whose franchise agreement has been terminated, canceled, or
27rejected to continue to perform warranty service repairs or continue
28to be eligible to offer or receive consumer or dealer incentives
29offered by the manufacturer or distributor.

30(g) Sell a park trailer, as specified in Section 18009.3 of the
31Health and Safety Code, without disclosing in writing to the
32purchaser that a park trailer is required to be moved by a transporter
33or a licensed manufacturer or dealer under a permit issued by the
34Department of Transportation or a local authority with respect to
35highways under their respective jurisdictions.

36(h) Advertise free merchandise, gifts, or services provided by
37a dealer contingent on the purchase of a vehicle. “Free” includes
38merchandise or services offered for sale at a price less than the
39seller’s cost of the merchandise or services.

P9    1(i) (1) Advertise vehicles, and related goods or services, at a
2specified dealer price, with the intent not to supply reasonably
3expectable demand, unless the advertisement discloses the number
4of vehicles in stock at the advertised price. In addition, whether
5or not there are sufficient vehicles in stock to supply a reasonably
6expectable demand, when phrases such as “starting at,” “from,”
7“beginning as low as,” or words of similar import are used in
8reference to an advertised price, the advertisement shall disclose
9the number of vehicles available at that advertised price.

10(2) For purposes of this subdivision, in a newspaper
11advertisement for a vehicle that is two model-years old or newer,
12the actual phrase that states the number of vehicles in stock at the
13advertised price shall be printed in a type size that is at least equal
14to one-quarter of the type size, and in the same style and color of
15type, used for the advertised price. However, in no case shall the
16phrase be printed in less than 8-point type size, and the phrase
17shall be disclosed immediately above, below, or beside the
18advertised price without intervening words, pictures, marks, or
19symbols.

20(3) The disclosure required by this subdivision is in addition to
21any other disclosure required by this code or any regulation
22regarding identifying vehicles advertised for sale.

23(j) Use “rebate” or similar words, including, but not limited to,
24“cash back,” in advertising the sale of a vehicle unless the rebate
25is expressed in a specific dollar amount and is in fact a rebate
26offered by the vehicle manufacturer or distributor, a finance
27company affiliated with a vehicle manufacturer or distributor, a
28regulated utility, or abegin delete governmentend deletebegin insert governmentalend insert entity directly to
29the retail purchaser of the vehicle or to the assignee of the retail
30purchaser.

31(k) Require a person to pay a higher price for a vehicle and
32related goods or services for receiving advertised credit terms than
33the cash price the same person would have to pay to purchase the
34same vehicle and related goods or services. For the purpose of this
35subdivision, “cash price” has thebegin insert sameend insert meaning as defined in
36subdivision (e) of Section 2981 of the Civil Code.

37(l) Advertise a guaranteed trade-in allowance.

38(m) Misrepresent the authority of a salesperson, representative,
39or agent to negotiate the final terms of a transaction.

P10   1(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
2or similar terms that refer to a dealer’s cost for a vehicle in an
3advertisement for the sale of a vehicle or advertise that the selling
4price of a vehicle is above, below, or at either of the following:

5(A) The manufacturer’s or distributor’s invoice price to a dealer.

6(B) A dealer’s cost.

7(2) This subdivision does not apply to either of the following:

8(A) A communication occurring during face-to-face negotiations
9for the purchase of a specific vehicle if the prospective purchaser
10initiates a discussion of the vehicle’s invoice price or the dealer’s
11cost for that vehicle.

12(B) A communication between a dealer and a prospective
13commercial purchaser that is not disseminated to the general public.
14For purposes of this subparagraph, a “commercial purchaser”
15means a dealer, lessor, lessor-retailer, manufacturer,
16remanufacturer, distributor, financial institution, governmental
17entity, or person who purchases 10 or more vehicles during a year.

18(o) Violate a law prohibiting bait and switch advertising,
19including, but not limited to, the guides against bait advertising
20set forth in Part 238 (commencing with Section 238) of Title 16
21of the Code of Federal Regulations, as those regulations read on
22January 1, 1988.

23(p) Make an untrue or misleading statement indicating that a
24vehicle is equipped with all the factory-installed optional equipment
25the manufacturer offers, including, but not limited to, a false
26statement that a vehicle is “fully factory equipped.”

27(q) Affix on a new vehicle a supplemental price sticker
28containing a price that represents the dealer’s asking price that
29exceeds the manufacturer’s suggested retail price unless all of the
30following occur:

31(1) The supplemental sticker clearly and conspicuously discloses
32in the largest print appearing on the sticker, other than the print
33size used for the dealer’s name, that the supplemental sticker price
34is the dealer’s asking price, or words of similar import, and that it
35is not the manufacturer’s suggested retail price.

36(2) The supplemental sticker clearly and conspicuously discloses
37the manufacturer’s suggested retail price.

38(3) The supplemental sticker lists each item that is not included
39in the manufacturer’s suggested retail price, and discloses the
40additional price of each item. If the supplemental sticker price is
P11   1greater than the sum of the manufacturer’s suggested retail price
2and the price of the items added by the dealer, the supplemental
3sticker price shall set forth that difference and describe it as “added
4mark-up.”

5(r) Advertise an underselling claim, including, but not limited
6to, “we have the lowest prices” or “we will beat any dealer’s price,”
7unless the dealer has conducted a recent survey showing that the
8dealer sells its vehicles at lower prices than another licensee in its
9trade area and maintains records to adequately substantiate the
10claims. The substantiating records shall be made available to the
11department upon request.

12(s) (1) Advertise an incentive offered by the manufacturer or
13distributor if the dealer is required to contribute to the cost of the
14incentive as a condition of participating in the incentive program,
15unless the dealer discloses in a clear and conspicuous manner that
16dealer participation may affect consumer cost.

17(2) For purposes of this subdivision, “incentive” means anything
18of value offered to induce people to purchase a vehicle, including,
19but not limited to, discounts, savings claims, rebates, below-market
20finance rates, and free merchandise or services.

21(t) Display or offer for sale a used vehicle unless there is affixed
22to the vehicle the Federal Trade Commission’s Buyer’s Guide as
23required by Part 455 of Title 16 of the Code of Federal Regulations.

24(u) Fail to disclose in writing to the franchisor of a new motor
25vehicle dealer the name of the purchaser, date of sale, and the
26vehicle identification number of each new motor vehicle sold of
27the line-make of that franchisor, or intentionally submit to that
28franchisor a false name for the purchaser or false date for the date
29of sale.

30(v) Enter into a contract for the retail sale of a motor vehicle
31unless the contract clearly and conspicuously discloses whether
32the vehicle is being sold as a new vehicle or a used vehicle, as
33defined in this code.

34(w) Use a simulated check, as defined in subdivision (a) of
35Section 22433 of the Business and Professions Code, in an
36advertisement for the sale or lease of a vehicle.

37(x) Fail to disclose, in a clear and conspicuous manner in at
38least 10-point boldface type on the face of a contract for the retail
39sale of a new motor vehicle that this transaction is, or is not, subject
P12   1to a fee received by an autobroker from the selling new motor
2vehicle dealer, and the name of the autobroker, if applicable.

3(y) Sell or lease a new motor vehicle after October 1, 2012,
4unless the dealer has a contractual agreement with the department
5to be a private industry partner pursuant to Section 1685. This
6subdivision does not apply to the sale or lease of a motorcycle or
7off-highway motor vehicle subject to identification under Section
838010 or a recreational vehicle as defined in Section 18010 of the
9Health and Safety Code.

10(z) As used in this section, “make” and “model” have the same
11meaning as is provided in Section 565.12 of Title 49 of the Code
12of Federal Regulations.

13

SEC. 3.  

Section 11713.16 of the Vehicle Code is amended to
14read:

15

11713.16.  

It is a violation of this code for the holder of any
16dealer’s license issued under this article to do any of the following:

17(a) Advertise any used vehicle of the current or prior model-year
18without expressly disclosing the vehicle as “used,” “previously
19owned,” or a similar term that indicates that the vehicle is used,
20as defined in this code.

21(b) Use the terms “on approved credit” or “on credit approval”
22in an advertisement for the sale of a vehicle unless those terms are
23clearly and conspicuously disclosed and unabbreviated.

24(c) Advertise an amount described by terms such as “unpaid
25balance” or “balance can be financed” unless the total sale price
26is clearly and conspicuously disclosed and in close proximity to
27the advertised balance.

28(d) Advertise credit terms that fail to comply with the disclosure
29requirements of Section 226.24 of Title 12 of the Code of Federal
30Regulations. Advertisements of terms that include escalated
31payments, balloon payments, or deferred downpayments shall
32clearly and conspicuously identify those payments as to amounts
33and time due.

34(e) Advertise as the total sales price of a vehicle an amount that
35includes a deduction for a rebate. However, a dealer may advertise
36a separate amount that includes a deduction for a rebate provided
37that the advertisement clearly and conspicuously discloses, in close
38proximity to the amount advertised, the price of the vehicle before
39the rebate deduction and the amount of the rebate, each so
P13   1identified. A dealer may not advertise a rebate deduction that
2conflicts with another advertised rebate deduction.

3(f) Advertise claims such as “everyone financed,” “no credit
4rejected,” or similar claims unless the dealer is willing to extend
5credit to any person under any and all circumstances.

6(g) Advertise the amount of any downpayment unless it
7represents the total payment required of a purchaser prior to
8delivery of the vehicle, including any payment for sales tax or
9license. Statements such as “$_____ delivers,” “$____ puts you
10in a new car” are examples of advertised downpayments.

11(h) Advertise the price of a new vehicle or class of new vehicles
12unless the vehicle or vehicles have all of the equipment listed as
13standard by the manufacturer or distributor or the dealer has
14 replaced the standard equipment with equipment of higher value.

15(i) Fail to clearly and conspicuously disclose in an advertisement
16for the sale of a vehicle any disclosure required by this code or
17any qualifying term used in conjunction with advertised credit
18terms. Unless otherwise provided by statute, the specific size of
19disclosures or qualifying terms is not prescribed.

20

SEC. 4.  

No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.



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