BILL ANALYSIS �
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THIRD READING
Bill No: SB 202
Author: Galgiani (D)
Amended: As introduced
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 10-0, 4/8/13
AYES: Price, Emmerson, Block, Corbett, Galgiani, Hernandez,
Hill, Padilla, Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : 7-0, 4/22/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Automotive repair
SOURCE : Les Schwab Tire Centers
DIGEST : This bill deletes repairing tires and changing tires
from the list of repair services exempt from registration as an
automotive repair dealer under the Bureau of Automotive Repair
(BAR).
ANALYSIS :
Existing law:
1.Registers and regulates more than 35,000 automotive repair
dealers (ARDs) under the Automotive Repair Act (Act) by BAR
within the Department of Consumer Affairs (DCA).
2.Defines certain terms in the Act, including:
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A. "Automotive repair dealer" to mean a person who, for
compensation, engages in the business of repairing or
diagnosing malfunctions of motor vehicles.
B. "Repair of motor vehicles" to mean maintenance of and
repairs to motor vehicles performed by an automotive repair
dealer including automotive body repair work, and specifies
exclusions from the definition.
C. "Automotive technician" to mean an employee of an
automotive dealer (or the dealer itself) who performs
maintenance, diagnostics, repair, removal, or installation
of any integral component parts of an engine, driveline,
chassis or body of any vehicle, and specifies exclusions
from the definition.
1.Requires an ARD to provide a customer with an itemized written
estimate for parts and labor and to obtain authorization from
the customer before performing work or charging for any work
on the customer's vehicle. Prohibits an ARD from charging a
customer for work done or parts supplied in excess of the
written estimate without first obtaining a customer's oral or
written authorization.
2.Establishes fees for an ARD registration.
This bill:
1.Removes the exemption for tire repair and tire changing from
the definitions of "repair of motor vehicles" and "automotive
technician."
2.Exempts from the definitions of "repair of motor vehicles" and
"automotive technician" tire services provided by or on behalf
of either a motor vehicle club holding a certificate of
authority under the Insurance Code, or a tow truck operator
possessing a valid motor carrier permit under the Vehicle
Code.
Background
This bill arose from a Sacramento area television news station's
consumer investigation on tire sales businesses for false and
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misleading advertisement for tire changing and repair services.
The report revealed that certain tire sales businesses were
advertising low prices online, but charging consumers more than
the advertised price once services were already performed
without prior notice or consent. When some consumers disputed
the amount or services, the tire store threatened to withhold
the consumer's car until payment was received.
Motor club and tow truck exemptions . By removing the exemption
for repairing tires and changing tires from the definitions of
vehicle repair and repair technician, the bill takes away the
exemption which allows a tire shop to not have to register with
BAR as an ARD. However, the bill adds a new exemption for tire
services provided by or on behalf of (1) a motor vehicle club
holding a certificate of authority under the Insurance Code; or
(2) a tow truck operator possessing a valid motor carrier permit
under the Vehicle Code.
A motor club must obtain a certificate of authority to act as a
motor club from the Department of Insurance. Motor clubs often
will provide emergency flat repair, tire changing or tire
services to their members. By including an exemption for tire
services by or on behalf of a motor club in the definition of
motor vehicle repair, this bill will not require a motor club to
register as an ARD. Tow truck operators must obtain a motor
carrier permit as specified under the Vehicle Code. A tow truck
operator often will provide emergency tire change, flat repair
or tire services to vehicle owners or operators. By including
an exemption for tire services by a tow truck operator, this
bill will not require a tow truck operator to register as an
ARD.
Tire and wheel complaints . The following data provided by BAR
reflects the number of tire and wheel complaints received over
the previous four years:
3/1/12 - 2/28/13: 307 complaints against licensees; 60
complaints against businesses not subject to licensure.
3/1/11 - 2/28/12: 331 complaints against licensees; 30
complaints against businesses not subject to licensure.
3/1/10 - 2/28/11: 393 complaints against licensees; 156
complaints against businesses not subject to licensure.
3/1/09 - 2/28/10: 339 complaints against licensees; 185
complaints against businesses not subject to licensure.
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Comments
According to the author's office, there are retail operations
that only sell and install tires and are exempted from
registration as an ARD and thus from enforcement jurisdiction of
the BAR. The author's office indicates that a number of
incidents have occurred where these "tire sales only" shops
advertise tires for a certain price, and then after the tires
are mounted present the customer with a final price that is
grossly higher than the advertised price and the customer
refuses to pay this final price, then these "tire sales only"
shops keep possession of the vehicle until the customer pays.
The author states, "Even though California's Unfair Competition
Laws prohibit these types of fraudulent activities, and the
Attorney General, or any district attorney, county counsel or
city attorney could seek injunctive relief or civil remedies,
customers rarely seek these avenues of recourse." This bill
deletes the exemption for "tire sales only" shops and place them
under the jurisdiction of the BAR, which would then be able to
regulate these retailers. The BAR has the authority to, among
other things, suspend or revoke their business licenses for such
fraudulent practices, according to the author. As stated by the
author, this is a consumer protection bill that ensures fairness
among competitors in the marketplace.
Prior Legislation
This bill is essentially identical to last year's AB 2065
(Galgiani) which was also sponsored by Les Schwab Tire Centers.
That bill was held on the suspense file in the Assembly
Appropriations Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Annual license revenue gains of approximately $560,000
(Vehicle Inspection and Repair Fund), assuming an estimated
2,800 new licensees.
According to BAR, any additional costs to process new
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applications, investigate more complaints, and conduct
enforcement activities would be covered by new license fee
revenues. BAR indicates that one-time workload related to
processing applications would be accomplished through
short-term redirection of existing staff.
SUPPORT : (Verified 4/23/13)
Les Schwab Tire Centers (source)
California New Car Dealers Association
California Tire Dealers Association
Consumers for Auto Reliability and Safety
ARGUMENTS IN SUPPORT : The bill's sponsor, Les Schwab Tire
Centers, states this bill provides a long-needed remedy to the
reported instances where "tire sales only" stores have allegedly
preyed on customers by quoting a price for a replacement set of
tires but charging an inflated amount after the tires have been
installed. The sponsor additionally states, "Although these
unfair practices are currently prohibited by law, it was
discovered that customers in these matters seldom seek the
assistance of the city or district attorneys for recourse ? it
is time for all entities in this specific tire sales only sector
to be placed under BAR's licensing and enforcement authority -
an authority which includes, among other things, the ability to
suspend or revoke business licenses when appropriate."
According to the sponsor, under BAR's regulation a tire company
will not only be required to provide customers with written
estimates for parts and labor, but no additional charges can
accrue without the customers prior authorization.
The California Tire Dealers Association states, "This consumer
protection bill would remedy deceptive practices some of these
shops engage in, whereby they advertise a "discounted" price for
a set of tires and then add on various hidden fees and services
to the customer. If a customer refuses payment, the shop then
threatens to keep possession of the vehicle until the bill is
paid in full. Few customers are aware that such practices are
illegal. This is not only unfair to the unwary consumer, but
also provides unfair cost competition to tire retailers in
California that are licensed under BAR because they provide
other repair services."
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The California New Car Dealers Association (CNCDA) states that
the bill will result in several benefits to car dealers and to
consumers. According to CNCDA, in California there is the
widespread potential for fraud among "tire sales only" shops
preying on customers by quoting one price for replacing tires,
but charging an inflated amount after the tires have been
installed. CNCDA states that this bill levels the playing field
for our dealer members, and creates a fairer business
environment and protects consumers.
MW:nl 4/24/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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