Amended in Senate June 15, 2014

Amended in Assembly April 24, 2014

Amended in Assembly March 27, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2667

Introduced by Assembly Member Bloom

February 21, 2014

An act to amend Section 1812.622 of, and to add Section 1812.650 to, the Civil Code, relating to electronic devices.

LEGISLATIVE COUNSEL’S DIGEST

AB 2667, as amended, Bloom. Rental-purchase agreements: electronic devices: monitoring technology.

Existing law, the Karnette Rental-Purchase Act, provides for the regulation of rental-purchase agreements, as defined. Existing law requires rental-purchase agreements to contain specified notices, including, among other things, information on costs and terms of payment. Existing law makes it a misdemeanor to willfully violate the provisions regulating rental-purchase agreements.

This bill would add to these provisions regulating rental-purchase agreements provisions requiring a lessor to provide clear and prominent notice to a consumer and obtain express consent from the consumer at the time the lessor and the consumer enter into a rental-purchase agreement for an electronic device if that device has geophysical location tracking technology installed begin insert by the lessor end insert and would prohibit a lessor from installing the technology without providing clear and prominent notice and obtaining express consent from the consumer. The bill would prohibit a lessor from using, selling, or sharing geophysical location tracking technology on an electronic device for any purpose other than begin delete to prevent fraud or loss end delete begin insert the repossession of the electronic device when there is a violation of the rental-purchase agreement, pursuant to the law, or when requested by the consumer end insert . The bill would prohibit a lessor from using or installing monitoring technology on an electronic device begin insert for any purpose other than to provide remote technical assistance when requested by the consumer end insert . The bill would provide for the expiration of and notification related to geophysical location tracking technology. begin delete The bill would provide for remote technical assistance, as specified. end delete

Because a willful violation of these provisions would be a crime, this 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:

SECTION 1.  

Section 1812.622 of the Civil Code is amended
to read:

1812.622.  

As used in this title:

(a) “Advertisement” means a commercial message in any
medium that directly or indirectly solicits or promotes one or more
specific rental-purchase transactions, excluding instore
merchandising aids. This definition does not limit or alter the
application of other laws, including Chapter 5 (commencing with
Section 17200) of Part 2 and Chapter 1 (commencing with Section
17500) of Part 3, of Division 7 of the Business and Professions
Code, to rental-purchase transactions.

(b) “Consumer” means a natural person or persons who rent or
lease personal property from a lessor pursuant to a rental-purchase
agreement or to whom a lessor offers personal property for use
pursuant to a rental-purchase agreement.

(c) “Lessor” means any person or entity that provides or offers
to provide personal property for use by consumers pursuant to a
rental-purchase agreement.

(d) “Rental-purchase agreement,” except as otherwise provided
in this subdivision, means an agreement between a lessor and a
consumer pursuant to which the lessor rents or leases, for valuable
consideration, personal property for use by a consumer for personal,
family, or household purposes for an initial term not exceeding
four months that may be renewed or otherwise extended, if under
the terms of the agreement the consumer acquires an option or
other legally enforceable right to become owner of the property.
A rental-purchase agreement is a lease subject to Title 1.5
(commencing with Section 1750) and Title 1.7 (commencing with
Section 1790).

“Rental-purchase agreement” shall not be construed to be, nor
be governed by, and shall not apply to, any of the following:

(1) A retail installment sale, as defined in Section 1802.5.

(2) A retail installment contract, as defined in Section 1802.6.

(3) A retail installment account, as defined in Section 1802.7.

(4) A lease or agreement that constitutes a security interest, as
defined in Section 1201 of the Commercial Code.

(5) A consumer credit contract, as defined in Section 1799.90.

(e) “Cash price” means the price of the personal property
described in the rental-purchase agreement that the consumer may
pay in cash to the lessor at the inception of the rental-purchase
agreement to acquire ownership of that personal property.

(f) “Cost of rental” means the difference between the total of
all periodic payments necessary to acquire ownership under the
rental-purchase agreement and the cash price of the rental property
that is subject to the rental-purchase agreement.

(g) “Fee” means any payment, charge, fee, cost, or expense,
however denominated, other than a rental payment.

(h) “Appliance” means and includes any refrigerator, freezer,
range including any cooktop or oven, microwave oven, washer,
dryer, dishwasher, or room air-conditioner or air purifier.

(i) “Electronic set” means and includes any television, radio,
camera, video game, or any type of device for the recording,
storage, copying, printing, transmission, display, or playback of
any sound or image, but does not include any item that is part of
a computer system.

(j) “Computer system” means a computer processor and a video
monitor, printer, and peripheral items primarily designed for use
with a computer. Audio and video devices, which are commonly
used for entertainment and into which data may be downloaded
from a computer, are not part of a computer system.

(k) “Lessor’s cost” means the documented actual cost, including
actual freight charges, of the rental property to the lessor from a
wholesaler, distributor, supplier, or manufacturer and net of any
discounts, rebates, and incentives.

(l) “Total of payments” means the total amount of periodic
payments necessary to acquire ownership of the property that is
the subject of the rental-purchase agreement if the consumer makes
all regularly scheduled payments.

(m) “Electronic device” means a desktop or laptop computer,
handheld device, tablet, begin delete smart phone, end delete begin insert smartphone, end insert or other
electronic product or device that has a platform on which to
download, install, or run any software program, code, script, or
other content.

begin delete

(n) “Clear and prominent notice” means notice presented in an
understandable language and syntax, in the predominantly used
language for that communication, and that:

(1) In textual communications, the required disclosures are
separate and apart from a privacy policy, data use policy, terms of
service, end-user license agreement, lease agreement, or other
similar document, and of a type, size, and location sufficiently
noticeable for an ordinary consumer to read and comprehend in
print that contrasts highly with the background on which they
appear.

(2) In communications disseminated orally or through audible
means, the required disclosures are delivered in a volume and
cadence sufficient for an ordinary consumer to hear and
comprehend.

(3) In communications disseminated through video means, the
required disclosures are in writing in a form consistent with
paragraph (1) and appear on the screen for a duration sufficient
for an ordinary consumer to read and comprehend them, and in
the same language as the predominantly used language for that
communication.

(4) In communications made through interactive media,
including the Internet, online services, and software, the required
disclosures are unavoidable and presented in a form consistent
with paragraph (1), in addition to any audio or video presentation.

end delete begin delete

(o)

end delete

begin insert (n) end insert  “Geophysical location tracking technology” means hardware,
software, or an application that collects and reports data or
information that identifies the precise geophysical location of an
item, begin delete including, end delete begin insert including end insert technologies that report the GPS
coordinates of an electronic device, the WiFi signals available to
or actually used by an electronic device to access the Internet, the
telecommunication towers or connections available to or actually
used by begin delete a computer end delete begin insert an electronic device end insert , the processing of any
reported data or information through geolocation lookup services,
or any information derived from any combination of the foregoing.

begin delete

(p)

end delete

begin insert (o) end insert  “Monitoring technology” means any hardware, software, or
application utilized in conjunction with begin delete a computer end delete begin insert an electronic
device end insert that can cause the begin delete computer end delete begin insert electronic device end insert to capture,
monitor, record, or report information about user activities begin insert with
or end insert without the user’s knowledge.

begin delete

(q)

end delete

begin insert (p) end insert  “Remote technical assistance” means collaborative access
by the user and technician to connect to an electronic device for
the purpose of providing technical support to the user.

begin delete

(r)

end delete

begin insert (q) end insert  “Express consent” means begin delete a clear choice to either agree or
not agree to any end delete begin insert the affirmative agreement to any use or installation
of end insert geophysical location tracking technology or remote technical
assistance. Express consent does not include consent given when
either option is highlighted or preselected as a default setting.

begin delete

(s) “Fraud” means an action by the consumer that necessitates
the lessor’s recovery of the electronic device, limited to
nonpayment or another breach of the rental-purchase agreement.

end delete

SEC. 2.  

Section 1812.650 is added to the Civil Code, to read:

1812.650.  

(a) A lessor shall provide clear and prominent notice
to a consumer and obtain express consent from the consumer at
the time the lessor and the consumer enter into a rental-purchase
agreement for an electronic device if that device has geophysical
location tracking technology installed begin insert by the lessor end insert , and at any
time the geophysical location tracking technology is begin delete activated. A
lessor shall not install geophysical location tracking technology
on an electronic device without first providing clear and prominent
notice to the consumer and obtaining express consent end delete begin insert activated or
used by the lessor end insert .

begin insert

(b) For purposes of this section, “clear and prominent notice”
means notice presented in an understandable language and syntax,
in the predominantly used language for that communication, and
that:

end insert begin insert

(1) In textual communications, the required disclosures are
separate and apart from a privacy policy, data use policy, terms
of service, end-user license agreement, lease agreement, or other
similar document, and of a type, size, and location sufficiently
noticeable for an ordinary consumer to read and comprehend in
print that contrasts highly with the background on which they
appear.

end insert begin insert

(2) In communications disseminated orally or through audible
means, the required disclosures are delivered in a volume and
cadence sufficient for an ordinary consumer to hear and
comprehend.

end insert begin insert

(3) In communications disseminated through video means, the
required disclosures are in writing in a form consistent with
paragraph (1) and appear on the screen for a duration sufficient
for an ordinary consumer to read and comprehend them, and in
the same language as the predominantly used language for that
communication.

end insert begin insert

(4) In communications made through interactive media,
including the Internet, online services, and software, the required
disclosures are unavoidable and presented in a form consistent
with paragraph (1), in addition to any audio or video presentation.

end insert begin delete

(b)

end delete

begin insert (c) end insert  A lessor shall not use, sell, or share geophysical location
tracking technology on an electronic device for any purpose other
than the begin delete prevention of fraud or loss end delete begin insert repossession of the electronic
device when there is a violation of the rental-purchase agreement,
pursuant to law, or when requested by the consumer end insert .

begin delete

(c)

end delete

begin insert (d) end insert  Clear and prominent notification shall be displayed on an
electronic device if geophysical location tracking technology is
activated begin insert or used by the lessor. This notification requirement shall
be suspended if the consumer or lessor reports that the electronic
device has been stolen and has filed a police report stating that
the electronic device has been stolen. For purposes of this
subdivision, “filing a police report” means the filing of a
consumer’s or lessor’s complaint with the police department in
any form recognized by that jurisdiction end insert .

begin delete

(d)

end delete

begin insert (e) end insert  A lessor shall provide that any geophysical location tracking
technology that has been installed begin insert by the lessor end insert on an electronic
device, or can be activated by the lessor, expires begin delete following the
lease period or upon completion of the purchase of the electronic
device end delete begin insert upon the first instance the electronic device connects to the
Internet after completion of the purchase of the electronic device end insert .

begin delete

(e)

end delete

begin insert (f) end insert  A lessor shall not use or install monitoring technology on an
electronic device for any purpose begin insert other than to provide remote
technical assistance when requested by the consumer end insert .

begin delete

(f)

end delete

begin insert (g) end insert  A lessor shall provide clear and prominent notice to a
consumer and obtain express consent from the consumer for the
installation begin insert or use end insert of any software that allows the begin delete use of end delete begin insert lessor to
provide end insert remote technical assistance and upon the activation and
deactivation of any remote technical assistance when requested
by the consumer.

begin delete

(g)

end delete

begin insert (h) end insert  A lessor shall not acquire any data when providing remote
technical assistance beyond what is necessary to provide assistance
to the user and beyond what the user has consented to. Any data
acquired during the period of consumer consented technical
assistance shall not be retained, used, or sold for any purpose.

begin insert

(i) This section shall not be interpreted to require a lessor to
enter into a rental-purchase agreement with any consumer who
does not provide express consent to the provisions of
above-described provisions of the rental-purchase agreement.

end insert

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act 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 XIII B of the California
Constitution.