Amended in Assembly September 3, 2013

Amended in Assembly June 26, 2013

Senate Bill No. 12

Introduced by Senator Corbett

December 3, 2012

An act to amend Section 1770 of the Civil Code, and to add Article 6 (commencing with Section 12098.10) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, relating to consumer affairs begin insert , and making an appropriation therefor end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 12, as amended, Corbett. Consumer affairs.

Existing law makes unlawful certain acts identified as unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result, or that results, in the sale or lease of goods to any consumer.

This bill would begin delete add to that list of acts an end delete begin insert additionally make unlawful the end insert act begin insert of end insert representing a product as made in California, by using a specified Made in California label, unless the product complies with begin delete standards adopted by the Governor’s Office of Business and Economic Development, to the extent those standards are adopted. The bill would establish the Made in California Program within the office, as provided, and would create the Made in California Fund as a special fund in the State Treasury, that, upon an appropriation of those funds by the Legislature, would be available for that purpose. end delete begin insert the requirements of the Made in California Program established by the Governor’s Office of Business and Economic Development. end insert The bill would require the office to report to the Legislature on January 1, 2015, and annually thereafter, regarding expenditures and progress of the program. The bill would additionally authorize the office to receive monetary donations and other donations from businesses, nonprofit organizations, or the public, for implementation of the program, as specified, and would authorize the office to charge begin delete an application end delete begin insert a registration end insert fee for participation in the program.

begin insert

The bill would create the Made in California Fund within the State Treasury. This bill would authorize the continuous appropriation of donated funds, as specified, to the director, for the purposes of the program, and require any other funds deposited and maintained in the Made in California Fund to be available for the same purpose subject to appropriation by the Legislature.

end insert

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 1770 of the Civil Code begin delete , as amended by
Section 1 of Chapter 653 of the Statutes of 2012, end delete is amended to
read:

1770.  

(a) The following unfair methods of competition and
unfair or deceptive acts or practices undertaken by any person in
a transaction intended to result or which results in the sale or lease
of goods or services to any consumer are unlawful:

(1) Passing off goods or services as those of another.

(2) Misrepresenting the source, sponsorship, approval, or
certification of goods or services.

(3) Misrepresenting the affiliation, connection, or association
with, or certification by, another.

(4) Using deceptive representations or designations of
geographic origin in connection with goods or services.

(5) Representing that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits, or quantities
which they do not have or that a person has a sponsorship,
approval, status, affiliation, or connection which he or she does
not have.

(6) Representing that goods are original or new if they have
deteriorated unreasonably or are altered, reconditioned, reclaimed,
used, or secondhand.

(7) Representing that goods or services are of a particular
standard, quality, or grade, or that goods are of a particular style
or model, if they are of another.

(8) Disparaging the goods, services, or business of another by
false or misleading representation of fact.

(9) Advertising goods or services with intent not to sell them
as advertised.

(10) Advertising goods or services with intent not to supply
reasonably expectable demand, unless the advertisement discloses
a limitation of quantity.

(11) Advertising furniture without clearly indicating that it is
unassembled if that is the case.

(12) Advertising the price of unassembled furniture without
clearly indicating the assembled price of that furniture if the same
furniture is available assembled from the seller.

(13) Making false or misleading statements of fact concerning
reasons for, existence of, or amounts of price reductions.

(14) Representing that a transaction confers or involves rights,
remedies, or obligations which it does not have or involve, or
which are prohibited by law.

(15) Representing that a part, replacement, or repair service is
needed when it is not.

(16) Representing that the subject of a transaction has been
supplied in accordance with a previous representation when it has
not.

(17) Representing that the consumer will receive a rebate,
discount, or other economic benefit, if the earning of the benefit
is contingent on an event to occur subsequent to the consummation
of the transaction.

(18) Misrepresenting the authority of a salesperson,
representative, or agent to negotiate the final terms of a transaction
with a consumer.

(19) Inserting an unconscionable provision in the contract.

(20) Advertising that a product is being offered at a specific
price plus a specific percentage of that price unless (A) the total
price is set forth in the advertisement, which may include, but is
not limited to, shelf tags, displays, and media advertising, in a size
larger than any other price in that advertisement, and (B) the
specific price plus a specific percentage of that price represents a
markup from the seller’s costs or from the wholesale price of the
product. This subdivision shall not apply to in-store advertising
by businesses which are open only to members or cooperative
organizations organized pursuant to Division 3 (commencing with
Section 12000) of Title 1 of the Corporations Code where more
than 50 percent of purchases are made at the specific price set forth
in the advertisement.

(21) Selling or leasing goods in violation of Chapter 4
(commencing with Section 1797.8) of Title 1.7.

(22) (A) Disseminating an unsolicited prerecorded message by
telephone without an unrecorded, natural voice first informing the
person answering the telephone of the name of the caller or the
organization being represented, and either the address or the
telephone number of the caller, and without obtaining the consent
of that person to listen to the prerecorded message.

(B) This subdivision does not apply to a message disseminated
to a business associate, customer, or other person having an
established relationship with the person or organization making
the call, to a call for the purpose of collecting an existing
obligation, or to any call generated at the request of the recipient.

(23) The home solicitation, as defined in subdivision (h) of
Section 1761, of a consumer who is a senior citizen where a loan
is made encumbering the primary residence of that consumer for
the purposes of paying for home improvements and where the
transaction is part of a pattern or practice in violation of either
subsection (h) or (i) of Section 1639 of Title 15 of the United States
Code or paragraph (e) of Section 226.32 of Title 12 of the Code
of Federal Regulations.

A third party shall not be liable under this subdivision unless
(A) there was an agency relationship between the party who
engaged in home solicitation and the third party or (B) the third
party had actual knowledge of, or participated in, the unfair or
deceptive transaction. A third party who is a holder in due course
under a home solicitation transaction shall not be liable under this
subdivision.

(24) (A) Charging or receiving an unreasonable fee to prepare,
aid, or advise any prospective applicant, applicant, or recipient in
the procurement, maintenance, or securing of public social services.

(B) For purposes of this paragraph, the following definitions
shall apply:

(i) “Public social services” means those activities and functions
of state and local government administered or supervised by the
State Department of Health Care Services, the State Department
of Public Health, or the State Department of Social Services, and
involved in providing aid or services, or both, including health
care services, and medical assistance, to those persons who,
because of their economic circumstances or social condition, are
in need of that aid or those services and may benefit from them.

(ii) “Public social services” also includes activities and functions
administered or supervised by the United States Department of
Veterans Affairs or the California Department of Veterans Affairs
involved in providing aid or services, or both, to veterans, including
pension benefits.

(iii) “Unreasonable fee” means a fee that is exorbitant and
disproportionate to the services performed. Factors to be
considered, when appropriate, in determining the reasonableness
of a fee, are based on the circumstances existing at the time of the
service and shall include, but not be limited to, all of the following:

(I) The time and effort required.

(II) The novelty and difficulty of the services.

(III) The skill required to perform the services.

(IV) The nature and length of the professional relationship.

(V) The experience, reputation, and ability of the person
providing the services.

(C) This paragraph shall not apply to attorneys licensed to
practice law in California, who are subject to the California Rules
of Professional Conduct and to the mandatory fee arbitration
provisions of Article 13 (commencing with Section 6200) of
Chapter 4 of Division 3 of the Business and Professions Code,
when the fees charged or received are for providing representation
in administrative agency appeal proceedings or court proceedings
for purposes of procuring, maintaining, or securing public social
services on behalf of a person or group of persons.

(25) (A) Advertising or promoting any event, presentation,
seminar, workshop, or other public gathering regarding veterans’
benefits or entitlements that does not include the following
statement in the same type size and font as the term “veteran” or
any variation of that term:

(i) “I am not authorized to file an initial application for Veterans’
Aid and Attendance benefits on your behalf, or to represent you
before the Board of Veterans’ Appeals within the United States
Department of Veterans Affairs in any proceeding on any matter,
including an application for such benefits. It would be illegal for
me to accept a fee for preparing that application on your behalf.”
The requirements of this clause do not apply to a person licensed
to act as an agent or attorney in proceedings before the Agency of
Original Jurisdiction and the Board of Veterans’ Appeals within
the United States Department of Veterans Affairs when that person
is offering those services at the advertised event.

(ii) The statement in clause (i) shall also be disseminated, both
orally and in writing, at the beginning of any event, presentation,
seminar, workshop, or public gathering regarding veterans’ benefits
or entitlements.

(B) Advertising or promoting any event, presentation, seminar,
workshop, or other public gathering regarding veterans’ benefits
or entitlements which is not sponsored by, or affiliated with, the
United States Department of Veterans Affairs, the California
Department of Veterans Affairs, or any other congressionally
chartered or recognized organization of honorably discharged
members of the Armed Forces of the United States, or any of their
auxiliaries that does not include the following statement, in the
same type size and font as the term “veteran” or the variation of
that term:

“This event is not sponsored by, or affiliated with, the United
States Department of Veterans Affairs, the California Department
of Veterans Affairs, or any other congressionally chartered or
recognized organization of honorably discharged members of the
Armed Forces of the United States, or any of their auxiliaries.
None of the insurance products promoted at this sales event are
endorsed by those organizations, all of which offer free advice to
veterans about how to qualify and apply for benefits.”

(i) The statement in this subparagraph shall be disseminated,
both orally and in writing, at the beginning of any event,
presentation, seminar, workshop, or public gathering regarding
veterans’ benefits or entitlements.

(ii) The requirements of this subparagraph shall not apply in a
case where the United States Department of Veterans Affairs, the
California Department of Veterans Affairs, or other congressionally
chartered or recognized organization of honorably discharged
members of the Armed Forces of the United States, or any of their
auxiliaries have granted written permission to the advertiser or
promoter for the use of its name, symbol, or insignia to advertise
or promote the event, presentation, seminar, workshop, or other
public gathering.

(26) Representing that a product is made in California by using
a Made in California label created pursuant to begin delete subdivision (d) of end delete
Section 12098.10 of the Government Code, unless the product
complies with begin delete standards adopted by the Governor’s Office of
Business and Economic Development. This paragraph shall be
operative only if standards to that effect have been adopted
pursuant to Section 12098.10 of the Government Code. end delete begin insert Section
12098.10 of the Government Code. end insert

(b) (1) It is an unfair or deceptive act or practice for a mortgage
broker or lender, directly or indirectly, to use a home improvement
contractor to negotiate the terms of any loan that is secured,
whether in whole or in part, by the residence of the borrower and
which is used to finance a home improvement contract or any
portion thereof. For purposes of this subdivision, “mortgage broker
or lender” includes a finance lender licensed pursuant to the
California Finance Lenders Law (Division 9 (commencing with
Section 22000) of the Financial Code), a residential mortgage
lender licensed pursuant to the California Residential Mortgage
Lending Act (Division 20 (commencing with Section 50000) of
the Financial Code), or a real estate broker licensed under the Real
Estate Law (Division 4 (commencing with Section 10000) of the
Business and Professions Code).

(2) This section shall not be construed to either authorize or
prohibit a home improvement contractor from referring a consumer
to a mortgage broker or lender by this subdivision. However, a
home improvement contractor may refer a consumer to a mortgage
lender or broker if that referral does not violate Section 7157 of
the Business and Professions Code or any other provision of law.
A mortgage lender or broker may purchase an executed home
improvement contract if that purchase does not violate Section
7157 of the Business and Professions Code or any other provision
of law. Nothing in this paragraph shall have any effect on the
application of Chapter 1 (commencing with Section 1801) of Title
2 to a home improvement transaction or the financing thereof.

SEC. 2.  

Article 6 (commencing with Section 12098.10) is
added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:

 

Article 6.  The Made in California Program

 

12098.10.  

(a) The Made in California Program, a public and
private collaboration, is hereby created within the Governor’s
Office of Business and Economic Development. The purposes of
the program are to encourage consumer product awareness and to
foster purchases of high-quality products begin delete manufactured end delete begin insert made end insert in
this state.

(b) (1) The office begin delete may end delete begin insert shall end insert develop begin delete and adopt standards that
permit end delete begin insert a program that permits end insert a company to represent that a
product is made in this state. begin delete Those standards may include any of end delete
begin insert To be eligible under the program, a company shall establish all
of end insert the following:

begin delete

(A) The company has a California-based workforce.

end delete begin delete

(B) The product is entirely or substantially manufactured in the
state.

end delete begin delete

(2) For purposes of this section, “manufacture” means the
process of taking raw materials or components and adding value
to those materials and components in order to create a final,
recognizable product. “Manufacture” does not include the process
of completing a final assembly from subassemblies made
elsewhere, or the act of packaging a product.

end delete begin insert

(A) The product is substantially made by an individual located
in the state.

end insert begin insert

(B) The finished product could lawfully use a “Made in U.S.A.”
label and not violate Section 17533.7 of the Business and
Professions Code.

end insert begin insert

(2) For purposes of this section, “substantially made” means
completing an act that adds at least 51 percent of a final product’s
wholesale value by manufacture, assembly, fabrication, or
production to create a final, recognizable product. “Substantially
made” does not include the act of packaging a product.

end insert

(c) The program begin delete and the standards end delete shall not apply to those
agricultural products subject to the Buy California Program
described in Section 58750 of the Food and Agricultural Code.

(d) In accordance with the provisions of Chapter 1 (commencing
with Section 58601) of Part 2 of Division 21 of the Food and
Agricultural Code, the office may issue and make effective a
marketing agreement, including, but not limited to, issuance of a
Made in California label, and be advised by those California
businesses willing to participate in the program on a voluntary
basis via funding or in-kind contributions in a manner defined
under the agreement.

(e) (1) As part of the Made in California Program, the office
shall require each company to begin delete apply to end delete begin insert register with end insert the office for
use of the Made in California label.

begin insert

(2) The company filing the registration shall submit a qualified
third-party certification at least once every three years that the
product is made in accordance with this section.

end insert begin insert

(3) For purposes of this section, “qualified third-party” means
an individual, group, or association that possesses a professional
license, certification, or other equivalent documentation indicating
sufficient training, education, or expertise to perform a regulatory
compliance audit.

end insert begin delete

(2)

end delete

begin insert ( end insert begin insert 4) end insert  The office may require a fee to accompany the begin delete application. end delete
begin insert registration. end insert The fee shall be determined by the office, and shall
not exceed the reasonable costs to the office in providing the
services for which it is begin delete charged. end delete begin insert charged, including, but not limited
to, the costs to implement the marketing program. end insert Proceeds from
the fee shall be begin delete used to cover the costs of implementing the Made
in California Program end delete begin insert deposited in the Made in California Fund
established in subdivision (h) end insert .

begin delete

(3) The office may begin accepting applications prior to fully
developing and implementing the Made in California Program.

end delete

(f) The office may accept monetary donations or other donations
from businesses, nonprofit organizations, or individuals for the
purpose of implementing the Made in California Program. begin insert These
donations shall be deposited in the Made in California Fund
established in subdivision (h). end insert

(g) (1) Notwithstanding Section 10231.5, the office shall report
to the Legislature on January 1, 2015, and each successive January
1, regarding its expenditures, progress, and ongoing priorities with
this program.

(2) The plan submitted to the Legislature pursuant to paragraph
(1) shall be submitted pursuant to Section 9795.

(h) The Made in California Fund is hereby created as a
begin delete special end delete fund begin delete in end delete begin insert within end insert the State begin delete Treasury consisting of the revenues
contributed pursuant to this section, and, upon an appropriation of
those funds by the Legislature, shall be available for purposes of
this section. end delete begin insert Treasury. Notwithstanding Section 13340, funds
deposited and maintained in the Made in California Fund that
were donated pursuant to subdivision (f) are continuously
appropriated, without regard to fiscal years, to the director, for
the purposes of implementing the Made in California Program.
Any other funds deposited and maintained in the Made in
California Fund are available, subject to appropriation by the
Legislature, for purposes of implementing the program. end insert

begin insert

begin insert 12098.11. end insert   

The provisions of this article shall be enforced
pursuant to the Consumers Legal Remedies Act, pursuant to Title
1.5 (commencing with Section 1750) of Part 4 of Division 3 of the
Civil Code, and do not impose any requirement upon the office to
enforce, audit, or investigate a company that participates in the
Made in California Program.

end insert