BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1732|
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THIRD READING
Bill No: AB 1732
Author: Stone (D)
Amended: 7/1/14 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 6/24/14
AYES: Jackson, Anderson, Corbett, Lara, Leno, Monning, Vidak
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : Vehicles: manufacturers, distributors, and dealers
SOURCE : California New Car Dealers Association
DIGEST : This bill prohibits a licensee from advertising a
vehicles prior use or ownership history in an inaccurate manner.
This bill also expands the authorized use of the word rebate to
allow advertisement of rebates offered by a finance company
affiliated with a vehicle manufacturer or distributor, a
regulated utility, or a governmental entity.
ANALYSIS :
Existing law:
1.Protects consumers and competitors against unlawful, unfair or
fraudulent business acts or practices and unfair, deceptive,
untrue, or misleading advertising.
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AB 1732
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2.Makes it unlawful for any person, firm, corporation or
association, or any employee thereof, to make or disseminate
before the public in this state, in any newspaper or other
publication or in any other manner or means whatever, any
statement concerning personal property which is untrue or
misleading, and which is known, or which by the exercise of
reasonable care should be known, to be untrue or misleading.
3.Prohibits any person from acting as a vehicle dealer,
remanufacturer, manufacturer, or transporter, as specified,
without having first been issued a license or temporary
permit, as specified.
4.Prohibits the holder of a license from, among other things,
making or disseminating any statement which is untrue or
misleading and which is known, or which by the reasonable
exercise of case should be known to be untrue or misleading,
as specified.
5.Prohibits the holder of a license from advertising or offering
for sale or exchange in any manner, any vehicle not actually
for sale at the premises of the dealer or available to the
dealer directly from the manufacturer or distributor of the
vehicle at the time of the advertisement or offer.
6.Prohibits the holder of a license from failing, within 48
hours, in writing to withdraw any advertisement of a vehicle
that has been sold or withdrawn from sale.
7.Prohibits the holder of a license from using "rebate" or
similar words, including, but not limited to, "cash back," in
advertising the sale of a vehicle unless the rebate is
expressed in a specific dollar amount and is in fact a rebate
offered by the vehicle manufacturer or distributor directly to
the retail purchaser of the vehicle or to the assignee of the
retail purchaser.
8.Authorizes the holder of a license to advertise a vehicle
sales price that includes a deduction for a rebate provided
that the advertisement clearly and conspicuously discloses, in
close proximity to the amount advertised, the price of the
vehicle before the rebate deduction and the amount of the
rebate, each so identified.
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AB 1732
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This bill:
1.Authorizes the use of "rebate" or similar words in an
advertisement if the rebate is offered by a finance company
affiliated with a vehicle manufacturer or distributor, a
regulated utility, or a governmental entity.
2.Provides that a dealer may not advertise a rebate deduction
that conflicts with another advertised rebate deduction.
3.Prohibits the holder of a license from advertising the prior
use or ownership history of a vehicle in an inaccurate manner.
Background
Since 1959, California has regulated the advertising practices
of vehicle manufacturers, distributors, and dealers. These
regulations serve to increase transparency in automobile sales,
protect consumers from deceptive advertising and sales
practices, and to foster an open market that allows for the free
flow of information. Over the past 50 years, the Legislature
has periodically modified its regulations governing vehicle
advertising in response to changes in industry practices.
Prior Legislation
AB 964 (Bonta, 2013) would have prohibited the advertising or
selling of a used vehicle as "certified" when a dealer knows or
should have known that the vehicle is subject to a
manufacturer's safety recall. The bill died on the Assembly
Inactive File.
AB 753 (Monning, 2011) would have expressly prohibited a rental
car company from renting a vehicle that is subject to a recall
notice unless the vehicle has been repaired as specified in the
notice. The bill died in the Senate Appropriations Committee.
AB 68 (Montanez, Chapter 128, Statutes of 2005) provided that a
car dealer may not advertise or sell as "certified" a used or
pre-owned motor vehicle unless specified conditions are
satisfied.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: Yes
SUPPORT : (Verified 7/31/14)
California New Car Dealers Association (source)
AAA Northern California, Nevada, and Utah
Automobile Club of Southern California
ARGUMENTS IN SUPPORT : The author writes:
AB 1732 seeks to modernize California's advertising laws to
better protect consumers and promote fair and open markets for
the sale of all vehicles. California's advertising laws were
created to allow consumers to have a complete understanding of
their obligations when making a purchase decision on a vehicle
and to accurately compare advertisements from different
dealers. This bill seeks to clarify and update current laws
to reflect industry's best [practices in three ways]:
Rebate Source Advertising: Current law limits a
dealer's ability to only advertise a rebate from a
manufacturer[,] even though . . . government agencies and
finance companies [offer] their own rebates and request
dealers to advertise these rebates to members of the
public. AB 1732 allows dealers to advertise governmental
and other rebates to consumers, such as Cash for Clunkers
and the Clean Vehicle Rebate Program.
Rebate Advertising: The interaction between [Business
and Professions] Code Sections 17200 and 17500 and the
dealer advertising laws about how to advertise rebates
(Vehicle Code Section 11713.16(e)) has caused confusion for
dealers and law enforcement. AB 1732 clarifies an already
commonly held belief that a rebate must not be advertised
if it conflicts with another advertised rebate.
Vehicle's Prior Use Disclosures: Current regulations
state that express advertisements of a vehicle's prior use
or ownership history must be accurate. This regulation is
often unknown to dealers and to help ensure compliance AB
1732 codifies this regulation.
ASSEMBLY FLOOR : 73-0, 5/8/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
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Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
Pérez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V.
Manuel Pérez, Vacancy
AL:k 8/4/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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