Amended in Senate April 9, 2014

Amended in Senate March 24, 2014

Senate Bill No. 962

Introduced by Senator Leno

(Coauthors: Senators Hancock, Pavley, and Wolk)

(Principal coauthor: Assembly Member Skinner)

February 6, 2014

An act to add Section 22761 to the Business and Professions Code, relating to mobile communications devices.

LEGISLATIVE COUNSEL’S DIGEST

SB 962, as amended, Leno. Advanced mobile communications devices.

Existing law regulates various business activities and practices, including the sale of telephones.

This bill would require that any advanced mobile communications device, as defined, that is sold in California on or after January 1, 2015, include a technological solution, which may consist of software, hardware, or both software and hardware, that can render inoperable the essential features of the device, as defined, when the device is not in the possession of the rightful owner. The bill would require that the technological solution be able to withstand a hard reset, as defined, and when enabled, prevent reactivation of the device on a wireless network except by the rightful owner or his or her authorized designee. The bill would make these requirements inapplicable begin delete to the sale of an advanced mobile communications device in California when (1) the device was manufactured prior to January 1, 2015, or was originally sold outside of California, and (2) end delete begin insert when end insert the device is resold in California on the begin delete secondary end delete begin insert secondhand end insert market or is consigned and held as collateral on a loan. The bill would prohibit the sale of an advanced mobile communications device in California without the technological solution being enabled, but would authorize the rightful owner to affirmatively elect to disable the technological solution after sale. begin delete The bill would prohibit a provider of commercial mobile radio service, as defined, from including any term or condition in a sales or service contract with an end-use consumer with an address within the state that requires or encourages the consumer or rightful owner to disable the technological solution that renders the consumer’s smartphone or other advanced communications device useless if stolen. end delete The bill would make a violation of the bill’s requirements subject to a civil penalty of not less than $500, nor more than $2,500, for each violation.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

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

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) According to the Federal Communications Commission,
smartphone thefts now account for 30 to 40 percent of robberies
in many major cities across the country. Many of these robberies
often turn violent with some resulting in the loss of life.

(b) Consumer Reports projects that 1.6 million Americans were
victimized for their smartphones in 2012.

(c) According to the New York Times, 113 smartphones are
lost or stolen every minute in the United States.

(d) According to the Office of the District Attorney for the City
and County of San Francisco, in 2012, more than 50 percent of all
robberies in San Francisco involved the theft of a mobile
communications device.

(e) Thefts of smartphones in Los Angeles increased 12 percent
in 2012, according to the Los Angeles Police Department.

(f) According to press reports, the international trafficking of
stolen smartphones by organized criminal organizations has grown
exponentially in recent years because of how profitable the trade
has become.

(g) Replacement of lost and stolen mobile communications
devices was an estimated thirty-billion-dollar ($30,000,000,000)
business in 2012 according to studies conducted by mobile
communications security experts. Additionally, industry
publications indicate that the four largest providers of commercial
mobile radio services made an estimated seven billion eight
hundred million dollars ($7,800,000,000) from theft and loss
insurance products in 2013.

(h) Technological solutions that render stolen mobile
communications devices useless already exist, but the industry has
been slow to adopt them.

(i) In order to be effective, these technological solutions need
to be ubiquitous, as thieves cannot distinguish between those
mobile communications devices that have the solutions enabled
and those that do not. As a result, the technological solution should
be able to withstand a hard reset or operating system downgrade,
and be enabled by default, with consumers being given the option
to affirmatively elect to disable this protection.

(j) Manufactures of advanced mobile communications devices
and commercial mobile radio service providers have a
responsibility to ensure their customers are not targeted as a result
of purchasing their products and services.

(k) It is the intent of the Legislature to require all smartphones
and other advanced mobile communications devices offered for
sale in California to come with a technological solution enabled,
in order to deter theft and protect consumers.

begin delete

(l) It is the further intent of the Legislature to prohibit any term
or condition in a service contract between a customer and a
commercial mobile radio service provider that requires or
encourages the customer to disable the technological solution that
renders the customer’s smartphone or other advanced
communications device useless if stolen.

end delete

SEC. 2.  

Section 22761 is added to the Business and Professions
Code, to read:

22761.  

(a) For purposes of this section, the following terms
have the following meanings:

(1) “Advanced mobile communications device” means an
electronic device that is regularly hand held when operated that
enables the user to engage in voice communications using mobile
telephony service, Voice over Internet Protocol, or Internet Protocol
enabled service, as those terms are defined in Sections 224.4 and
239 of the Public Utilities Code, and to connect to the Internet,
and includes what are commonly known as smartphones and
tablets.

(2) “Commercial mobile radio service” means “commercial
mobile service,” as defined in subsection (d) of Section 332 of
Title 47 of the United States Code and as further specified by the
Federal Communications Commission in Parts 20, 22, 24, and 25
of Title 47 of the Code of Federal Regulations, and includes
“mobile satellite telephone service” and “mobile telephony
service,” as those terms are defined in Section 224.4 of the Public
Utilities Code.

(3) “Essential features” of an advanced mobile communications
device include the ability to use the device for voice
communications and the ability to connect to the Internet, including
the ability to access and use mobile software applications
commonly known as “apps.” begin insert end insert

(4) “Hard reset” means the restoration of an advanced mobile
communications device to the state it was in when it left the
factory, and refers to any act of returning a device to that state,
including processes commonly termed a factory reset or master
reset.

(5) “Sold in California” means that the advanced mobile
communications device is sold at begin delete retail, and not for resale, end delete begin insert retail end insert
from a location within the state, or the advanced mobile
communications device is sold and shipped to an end-use consumer
at an address within the state. begin insert “Sold in California” does not include
a device that is resold in the state on the secondhand market or
that is consigned and held as collateral on a loan. end insert

(b) (1) Any advanced mobile communications device that is
sold in California on or after January 1, 2015, shall include a
technological solution that can render the essential features of the
device inoperable when the device is not in the possession of the
rightful owner. The technological solution shall be reversible, so
that if the rightful owner obtains possession of the device after the
essential features of the device have been rendered inoperable, the
operation of those essential features can be restored by the rightful
owner or his or her authorized designee. A technological solution
may consist of software, hardware, or a combination of both
software and hardware, but shall be able to withstand a hard reset,
and when enabled, shall prevent reactivation of the device on a
wireless network except by the rightful owner or his or her
authorized designee. No advanced mobile communications device
may be sold in California without the technological solution
enabled. begin delete The essential features that are required to be rendered
inoperable pursuant to this paragraph do not include the ability of
the device to access emergency services by dialing the numerals
“911.” end delete

begin delete

(2) The requirements of paragraph (1) do not apply to the sale
of an advanced mobile communications device in California if
both of the following are true:

end delete begin delete

(A) The device was manufactured prior to January 1, 2015, or
was originally sold outside of California.

end delete begin delete

(B) The device is resold in California on the secondary market
or is consigned and held as collateral on a loan.

end delete begin insert

(2) The “essential features” that are required to be rendered
inoperable pursuant to this subdivision do not include the ability
of a device to access emergency services by a voice call or text to
the numerals “911” and the ability of a device to receive wireless
emergency alerts and warnings.

end insert

(3) The rightful owner of an advanced mobile communications
device may affirmatively elect to disable the technological solution
after sale. However, the physical acts necessary to disable the
technological solution may only be performed by the end-use
consumer or a person specifically selected by the end-use consumer
to disable the technological solution and shall not be physically
performed by any retail seller of the advanced mobile
communications device.

begin delete

(c) A provider of commercial mobile radio service shall not
include a charge, discount, incentive, or other term or condition
in a sales or service contract with an end-use consumer with an
address within the state that requires or encourages the consumer
or rightful owner to disable the technological solution that renders
the consumer’s smartphone or other advanced communications
device useless if stolen.

(d) (1) 

end delete

begin insert (c) end insert begin insert   end insert A person or retail entity selling an advanced communications
device in California in violation of subdivision (b) shall be subject
to a civil penalty of not less than five hundred dollars ($500), nor
more than two thousand five hundred dollars ($2,500), per device
sold in California.

begin delete

(2) A provider of commercial mobile radio service that includes
a term or condition in a service contract with an end-use consumer
with an address within the state in violation of subdivision (c) shall
be subject to a civil penalty of not less than five hundred dollars
($500), nor more than two thousand five hundred dollars ($2,500),
per service contract with an end-use consumer with an address
within California.

end delete begin insert

(d) Any request by a government agency to interrupt
communications service utilizing a technological solution required
by this section is subject to Section 7908 of the Public Utilities
Code.

end insert begin insert

(e) Nothing in this section requires a technological solution
that is incompatible with, or renders it impossible to comply with,
obligations under state and federal law and regulation related to
any of the following:

end insert begin insert

(1) The provision of emergency services through the 911 system,
including text to 911, bounce-back messages, and location
accuracy requirements.

end insert begin insert

(2) Participation in the wireless emergency alert system.

end insert begin insert

(3) Participation in state and local emergency alert and public
safety warning systems.

end insert