Amended in Senate May 24, 2013

Amended in Senate May 7, 2013

Amended in Senate April 22, 2013

Amended in Senate April 1, 2013

Senate Bill No. 686

Introduced by Senator Jackson

February 22, 2013

An act to amend Section 11713.18 of, and to add Sections 11713.27 and 11713.28 to, the Vehicle Code, relating to vehicles.

LEGISLATIVE COUNSEL’S DIGEST

SB 686, as amended, Jackson. Vehicles: vehicle dealers.

Existing law provides that it is a violation of the Vehicle Code for the holder of any dealer’s license issued as specified to advertise for sale or sell a used vehicle as “certified” or use any similar descriptive term in the advertisement or the sale of a used vehicle that implies the vehicle has been certified to meet the terms of a used vehicle certification program if any of specified provisions apply, including, but not limited to, the dealer knows or should have known that the vehicle has sustained frame damage, and the dealer disclaims any warranties of merchantability on the vehicle. Under existing law, a violation of these provisions is a crime.

The bill would also prohibit that representation from being made if the dealer knows or should have known that the vehicle is subject to a manufacturer’s safety recall, and the repairs required to correct the defect have not been performed on the vehicle. By creating a new crime, the bill would impose a state-mandated local program.

Existing law provides that it is unlawful for a lessor-retailer to sell a vehicle without a vehicle dealer license or temporary permit. Existing law prohibits a licensed dealer from engaging in certain practices, including, among others, making an untrue or misleading statement indicating that a vehicle is equipped with all the factory-installed optional equipment the manufacturer offers. Under existing law, a violation of these provisions is a crime.

This bill would additionally prohibit a dealer from selling, leasing for an initial term of less than 4 months, renting, loaning, or otherwise transferring ownership at retail of a used vehicle, as specified, if the dealer knows or should have known that the vehicle is subject to a manufacturer’s safety recall, unless the repairs required to correct the defect have been performed on the vehicle. The bill would additionally prohibit a rental company that is also a dealer from selling or otherwise transferring ownership at retail of a used vehicle, if the rental company knows or should have known that the vehicle is subject to a manufacturer’s safety recall, unless the repairs required to correct the defect have been performed on the vehicle. The bill would require a dealer to obtain information about a used vehicle’s safety recall status, as specified. By creating a new crime, this bill would impose a state-mandated local program. The bill would also make a violation of these provisions actionable under the Consumers Legal Remedies Act and the Unfair Competition Law, and as false advertising. begin insert end insert begin insert Specified prohibitions of this bill would become operative upon the initial effective date of the regulations adopted pursuant to a provision of the federal Moving Ahead for Progress in the 21st Century Act that implement that act. The bill would correct erroneous cross-references. end insert

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 11713.18 of the Vehicle Code is amended
to read:

11713.18.  

(a) It is a violation of this code for the holder of
any dealer’s license issued under this article to advertise for sale
or sell a used vehicle as “certified” or use any similar descriptive
term in the advertisement or the sale of a used vehicle that implies
the vehicle has been certified to meet the terms of a used vehicle
certification program if any of the following apply:

(1) The dealer knows or should have known that the odometer
on the vehicle does not indicate actual mileage, has been rolled
back or otherwise altered to show fewer miles, or replaced with
an odometer showing fewer miles than actually driven.

(2) The dealer knows or should have known that the vehicle
was reacquired by the vehicle’s manufacturer or a dealer pursuant
to state or federal warranty laws.

(3) The title to the vehicle has been inscribed with the notation
“Lemon Law Buyback,” “manufacturer repurchase,” “salvage,”
“junk,” “nonrepairable,” “flood,” or similar title designation
required by this state or another state.

(4) The vehicle has sustained damage in an impact, fire, or flood,
that after repair prior to sale substantially impairs the use or safety
of the vehicle.

(5) The dealer knows or should have known that the vehicle has
sustained frame damage.

(6) Prior to sale, the dealer fails to provide the buyer with a
completed inspection report indicating all the components
inspected.

(7) The dealer disclaims any warranties of merchantability on
the vehicle.

(8) The vehicle is sold “AS IS.”

(9) The term “certified” or any similar descriptive term is used
in any manner that is untrue or misleading or that would cause any
advertisement to be in violation of subdivision (a) of Section 11713
of this code or Section 17200 or 17500 of the Business and
Professions Code.

(10) The dealer knows or should have known that the vehicle
is subject to a manufacturer’s safety recall, and the repairs required
to correct the defect have not been performed on the vehicle. begin insert The
prohibition of this paragraph shall become operative on the initial
effective date of the regulations adopted pursuant to Section 31301
of the federal Moving Ahead for Progress in the 21st Century Act
(Public Law 112-141), that implement that act. end insert

(b) A violation of this section is actionable under the Consumers
Legal Remedies Act (Title 1.5 (commencing with Section 1750)
of Part 4 of Division 3 of the Civil Code), the Unfair Competition
Law (Chapter 5 (commencing with Section 17200) of Part 2 of
Division 7 of the Business and Professions Code), Section 17500
of the Business and Professions Code, or any other applicable state
or federal law. The rights and remedies provided by this section
are cumulative and shall not be construed as restricting any right
or remedy that is otherwise available.

(c) This section does not abrogate or limit any disclosure
obligation imposed by any other law.

(d) This section does not apply to the advertisement or sale of
a used motorcycle or a used off-highway motor vehicle subject to
identification under Section 38010.

SEC. 2.  

Section 11713.27 is added to the Vehicle Code, to
read:

11713.27.  

(a) Except for a rental company, as defined in
Section 1936 of the Civil Code, a dealer issued a license under
this article shall not sell, lease for an initial term of less than four
months, rent, loan, or otherwise transfer ownership at retail of a
used vehicle, as defined in Section 665 and subject to registration
under this code, if the dealer knows or should have known that the
vehicle is subject to a manufacturer’s safety recall, unless the
repairs required to correct the defect have been performed on the
vehicle.

(b) For purposes of this section, a dealer is deemed to have
knowledge of a manufacturer’s safety recall if either of the
following applies:

(1) The dealer receives notification from the manufacturer.

(2) The dealer is a franchisee of the manufacturer.

(c) In the absence of knowledge pursuant to subdivision (b),
and until auto manufacturers are required to provide vehicle safety
recall data on a publicly accessible Internet Web site pursuant to
Section 31301 of begin delete Title 49 of the United States Code, end delete begin insert the federal
Moving Ahead for Progress in the 21st Century Act (Public Law
112-141), end insert a dealer shall obtain information about a vehicle’s safety
recall status prior to completing a transaction subject to this section
from at least one of the following sources of information:

(1) The Internet Web site of the manufacturer, provided that the
safety recall status of the vehicle is made available by the
manufacturer.

(2) A toll-free telephone number, provided that the manufacturer
has made the safety recall status of the vehicle available at that
number.

(3) Another dealer that is a franchisee of the manufacturer.

(4) A commonly available vehicle history report, provided that
the safety recall status of the vehicle is available.

(d) When auto manufacturers are required to provide vehicle
safety recall data on a publicly accessible Internet Web site
pursuant to Section 31301 of begin delete Title 49 of the United States Code, end delete
begin insert the federal Moving Ahead for Progress in the 21st Century Act
(Public Law 112-141), end insert a dealer shall obtain information about a
used vehicle’s safety recall status from that database.

(e) A violation of this section is actionable under the Consumers
Legal Remedies Act (Title 1.5 (commencing with Section 1750)
of Part 4 of Division 3 of the Civil Code), the Unfair Competition
Law (Chapter 5 (commencing with Section 17200) of Part 2 of
Division 7 of the Business and Professions Code), Section 17500
of the Business and Professions Code, and any other applicable
state or federal law. The rights and remedies provided by this
section are cumulative and shall not be construed as restricting
any right or remedy that is otherwise available.

begin insert

(f) The prohibition of this section shall become operative on the
initial effective date of the regulations adopted pursuant to Section
31301 of the federal Moving Ahead for Progress in the 21st
Century Act (Public Law 112-141), that implement that act.

end insert

SEC. 3.  

Section 11713.28 is added to the Vehicle Code, to
read:

11713.28.  

(a) A rental company, as defined in Section 1936
of the Civil Code, that is also a dealer licensed under this article
shall not sell or otherwise transfer ownership at retail of a used
vehicle, as defined in Section 665 and subject to registration under
this code, if the rental company knows or should have known that
the vehicle is subject to a manufacturer’s safety recall, unless the
repairs required to correct the defect have been performed on the
vehicle.

(b) For purposes of this section, a rental company is deemed to
have knowledge of a manufacturer’s safety recall when the rental
company receives notification of the manufacturer’s safety recall
pursuant to subdivision (b) or (c) of Section 30118 or Section
30119 of Title 49 of the United States Code.

(c) In the absence of knowledge pursuant to subdivision (b) of
this section, and until auto manufacturers are required to provide
vehicle safety recall data on a publicly accessible Internet Web
site pursuant to Section 31301 of begin delete Title 49 of the United States
Code, end delete begin insert the federal Moving Ahead for Progress in the 21st Century
Act (Public Law 112-141), end insert a rental company shall obtain
information about a vehicle’s safety recall status prior to
completing a transaction subject to this section from at least one
of the following sources of information:

(1) The Internet Web site of the manufacturer, provided that the
safety recall status of the vehicle is made available by the
manufacturer.

(2) A toll-free telephone number, provided that the manufacturer
has made the safety recall status of the vehicle available at that
number.

(3) Another dealer that is a franchisee of the manufacturer.

(4) A commonly available vehicle history report, provided that
the safety recall status of the vehicle is available.

(d) When auto manufacturers are required to provide vehicle
safety recall data on a publicly accessible Internet Web site
pursuant to Section 33101 of begin delete Title 49 of the United States Code, end delete
begin insert the federal Moving Ahead for Progress in the 21st Century Act
(Public Law 112-141), end insert rental car companies shall obtain
information about a used vehicle’s safety recall status from that
database.

(e) A violation of this section is actionable under the Consumers
Legal Remedies Act (Title 1.5 (commencing with Section 1750)
of Part 4 of Division 3 of the Civil Code), the Unfair Competition
Law (Chapter 5 (commencing with Section 17200) of Part 2 of
Division 7 of the Business and Professions Code), Section 17500
of the Business and Professions Code, and any other applicable
state or federal law. The rights and remedies provided by this
section are cumulative and shall not be construed as restricting
any right or remedy that is otherwise available.

begin insert

(f) The prohibition of this section shall become operative on the
initial effective date of the regulations adopted pursuant to Section
31301 of the federal Moving Ahead for Progress in the 21st
Century Act (Public Law 112-141), that implement that act.

end insert

SEC. 4.  

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.