BILL ANALYSIS Ó
AB 2503
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2503 (Hagman)
As Amended August 19, 2014
2/3 vote. Urgency
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|ASSEMBLY: |78-0 |(May 15, 2014) |SENATE: |36-0 |(August 21, |
| | | | | |2014) |
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Original Committee Reference: B., P. & C.P.
SUMMARY : Revises the Collateral Recovery Act (Act) to specify
that buy-here-pay-here dealers are prohibited from using
unlicensed repossessors and to prohibit knowing submissions of
false reports, among other reforms, and exempts repossessed
vehicles from certain registration requirements. Specifically,
this bill :
1)Requires an Licensed Repossession Agency (LRA) to only
transact business with another person or entity as an
independent contractor, and prohibits an LRA from allowing
anyone other than a qualified certificate holder, or its owner
or officer, manage its operations or transact business.
2)Makes it a misdemeanor, punishable by a fine of up to $5,000,
for a "buy-here-pay-here" dealer to knowingly engage a
nonexempt unlicensed person to repossess collateral on its
behalf.
3)Authorizes the Department of Motor Vehicles (DMV) to suspend
or revoke the license issued to a 'buy-here-pay-here' dealer
if it violates the Act.
4)Clarifies that a repossessor may not determine the value of
any collateral, whether damaged or not.
5)Authorizes a repossessor to complete a condition report for
collateral that makes a general assessment of the collateral
but does not include damage or missing parts, as specified.
6)Exempts the use of a badge, cap insignia, or jacket patch by a
repossessor from the prohibition on using any identification,
other than as specified, to indicate registration as a
repossessor.
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7)Authorizes Business of Security and Investigative Services
(BSIS) to assess a $25 administrative fine against a
repossessor for knowingly submitting any false report, rather
than only reports submitted to an employer.
8)Deletes provisions of law that allow a person in possession of
the vehicle, or the legal owner, to release a vehicle to the
debtor if the debtor pays specified fees to be transmitted the
chief of police or parking authority.
9)Prohibits a repossessor from paying the fee to, or retrieving
the receipt from, the chief of police or parking authority.
10)Requires a repossessor to contact, instead of notify, law
enforcement within one hour after taking possession of a
vehicle, and to continue to attempt notification until the
repossessor provides notification.
11)Requires that notification to law enforcement include all of
the following:
a) The location, date, and time of the repossession;
b) The vehicle year, make, and model;
c) The last six digits of the vehicle identification
number;
d) The registered owner;
e) The legal owner requesting the repossession; and
f) The LRA's name and telephone number.
12)Exempts from registration a vehicle obtained by a repossessor
for purposes of removing the vehicle to the repossessor's
storage facility or the facility of the legal owner.
13)Requires a law enforcement agency, impounding authority, tow
yard, storage facility, or any other person in possession of
the collateral to release the vehicle without requiring
current registration, as specified.
14)Requires the legal owner of collateral to indemnify and hold
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harmless a law enforcement agency, city, county, city and
county, the state, a tow yard, storage facility, or an
impounding yard from a claim arising out of the release of
collateral to a licensee.
15)Prohibits a person, other than a peace officer acting in an
official capacity, from interfering with the transport of a
vehicle to a storage facility, auction, or dealer by an
individual employed by an LRA or a repossessor once
repossession is complete, as specified, and makes a violation
of that provision an infraction.
16)Prohibits a tow yard, impounding agency, governmental agency,
or any person acting on behalf of these entities from refusing
to release a vehicle or other collateral to anyone legally
entitled to that vehicle or other collateral, except as
specified.
17)Deletes obsolete provisions of law relating to the sale of
collateral.
18)Makes other technical and clarifying changes.
The Senate amendments :
1)Delete provisions that would increase from 120 to 180 the
number of days following the death of a licensee that a member
of the immediate family of the deceased licensee is entitled
to continue the LRA under the same license.
2)Delete provisions that would require DMV to waive any renewal
penalties that are due for late payment for a vehicle on which
renewal fees are due and that is repossessed by a repossessor,
if the fees are paid within 60 days of taking possession.
3)Require an LRA to only transact business with another person
or entity as an independent contractor, and prohibits an LRA
from allowing anyone other than a qualified certificate
holder, or its owner or officer, manage its operations or
transact business.
4)Authorize DMV to suspend or revoke the license issued to a
"buy-here-pay-here" dealer if it violates the Act.
5)Authorize a repossessor to complete a condition report for
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collateral that makes a general assessment of the collateral
but does not include damage or missing parts, as specified.
6)Delete provisions that allow a person in possession of the
vehicle, or the legal owner, to release a vehicle to the
debtor if the debtor pays specified fees to be transmitted the
chief of police or parking authority, and prohibits a
repossessor from paying the fee to, or retrieving the receipt
from, the chief of police or parking authority.
7)Require the legal owner of collateral to indemnify and hold
harmless a law enforcement agency, city, county, city and
county, the state, a tow yard, storage facility, or an
impounding yard from a claim arising out of the release of the
collateral to a licensee if the collateral was released in
compliance with this subdivision.
8)Delete obsolete provisions of law relating to the sale of
collateral.
9)Make other technical and clarifying changes.
10)Add an urgency clause allowing this bill to take effect
immediately upon enactment.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose of this bill. This bill updates the Act to revise a
number of industry practices, including expanding prohibitions
against submitting false reports and requiring a repossessor
to contact, instead of notify, law enforcement within one hour
after repossession. This bill also exempts repossessed
vehicles from certain registration requirements, and makes it
an infraction to interfere with the transport of a repossessed
vehicle. This bill is sponsored by the California Association
of Licensed Repossessors.
2)Author's statement. According to the author, "[This bill]
updates provisions of the [Act] and various sections of the
Vehicle Code, relating to repossessions. This bill would
provide clarity to current codes while addressing various
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issues pertaining to the activities of licensed repossession
agencies. Specifically the issues of identification,
notification requirements, and registration and renewal fee
exemptions are addressed.
"Last year's AB 791 ensured proper identification within the
industry by authorizing a licensee to wear a badge, cap
insignia, or jacket patch that meets specified requirements.
The Department of Consumer Affairs (DCA) is currently
authorized to levy fines for using any identification to
indicate registration as a repossessor other than a
registration card issued by the Bureau of Security and
Investigative Services. This bill would clarify this section
by adding the authorized badge, insignia, or patch as allowed
identification that is exempt from this section.
"Current law requires repossessors to notify law enforcement
within one hour of taking possession of a vehicle whenever
possession is taken by or on behalf of any legal owner under
the terms of a security agreement or lease agreement.
However, this provision is not practical, as it can be
difficult to get through to the appropriate law enforcement
agency within a one-hour time-frame. This bill would reflect
a more realistic time frame by changing the requirement to
attempting notification within one hour, and to accomplish
notification within two hours.
"This bill would exempt registration for a vehicle repossessed
pursuant to the terms of a security agreement solely for the
purpose of obtaining release of the vehicle from an impounding
authority. This prevents a repossessor from being burdened
with paying for a registration simply for attempting to obtain
a release for a vehicle. Additionally, this bill would
prevent a repossessor from having to pay registration renewal
penalties if repossessing a vehicle on which fees are overdue,
as long as the fees are paid within 60 days of taking
possession."
3)Prohibition against using unlicensed repossessors. In
addition to financial institutions that may secure collateral
under a security agreement, other entities, such as car
dealers (which typically use third party financing) and
"buy-here-pay-here" dealers (dealers that do not use third
party financing and maintain their own sales and lease
portfolios) may have collateral that is secured under a
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security agreement. According to the sponsors, these car
dealers, especially buy-here-pay-here dealers, represent a
large number of lenders who use unlicensed repossessors to
collect their collateral.
Existing law makes it a misdemeanor for "any person" to
knowingly engage a nonexempt unlicensed person to repossess
collateral on its behalf, and specifies that financial
institutions are also subject to a misdemeanor for a
violation. Although a car dealer is already subject to a
misdemeanor for a violation of those provisions, which apply
to "any person," the sponsors assert that making it explicit
in statute that car dealers are also subject to the same
provisions may reduce unlicensed activity.
4)Clarifying and updating the Act. AB 791 (Hagman), Chapter
340, Statutes of 2013 authorized repossessors to voluntarily
wear badges, cap insignia, or jacket labels that identify the
LRA's name, license number and role as a repossessor to help
consumers visually identify a licensed repossessor. However,
Business and Professions Code 7508.1 still authorizes BSIS to
assess a $25 administrative fine for using any identification
other than a bureau-issued registration card, or a
bureau-approved employer identification card issued by the
LRA, to indicate registration as a repossessor. This bill
amends this section to conform to the new authorization
provided by AB 791.
Because AB 791 also prohibited an LRA from selling repossessed
collateral, this bill would also delete obsolete provisions
relating to the sale of collateral in accordance with AB 791.
5)Law enforcement notification. Repossessors are required to
notify law enforcement within one hour after taking possession
of a vehicle, and may be found guilty of an infraction and
punishable with a fine between $300 and $500. District
attorneys, city attorneys, and city prosecutors are required
to notify BSIS of any convictions. While it is unknown how
many repossessors have been fined or convicted for violating
these provisions, according to the sponsors, it has been much
more difficult in recent years to get through to law
enforcement within one hour of repossessing a vehicle, and
repossessors are frequently being instructed to call back
because more pressing matters require immediate attention.
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This bill would give repossessors a more realistic timeframe to
comply with notice requirements, and would also standardize
the information required to be provided to law enforcement to
provide consistency to repossessors and law enforcement.
6)Registration exemptions. Repossessed vehicles are exempt from
registration requirements for purposes of transporting the
vehicle from the point of the repossession to the storage
facilities of the repossessor, and from the storage facilities
to the legal owner or a vehicle auction. After a repossessed
vehicle reaches the legal owner or a vehicle auction,
registration is not required to be paid until the vehicle is
sold to its next owner. However, this exemption does not
apply when a vehicle is impounded or held by a person or
entity and the repossessor is seeking release of the vehicle.
This bill would also exempt repossessors seeking to release a
vehicle from an impounding entity from paying registration
fees, which would leave that responsibility with the future
owner of the vehicle.
7)Interfering with the transport of a repossessed vehicle.
Despite provisions of law that make it an infraction for
persons to willfully tamper with a vehicle or to climb onto or
in it, or make it a misdemeanor for a person to prevent
someone with custody or possession of a vehicle from taking or
driving the vehicle without the owner's consent, the sponsors
assert that repossessors frequently encounter debtors who
interfere with their duties, which poses a risk to both the
debtor and the repossessor. The sponsors seek to reduce these
risky encounters by making clear that it is unlawful to
interfere with the transport of a repossessed vehicle, and
assert that debtors may be deterred from interfering with a
repossessed vehicle if they knew they could be subject to an
infraction.
Analysis Prepared by : Eunie Linden / B., P. & C.P. / (916)
319-3301
FN: 0005332
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