Amended in Assembly June 2, 2014

Amended in Senate May 5, 2014

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. begin delete Advanced mobile communications devices. end delete begin insert Smart phones. end insert

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

This bill would require that any begin delete advanced mobile communications device, commonly known as a smartphone, that is manufactured and sold in California on or after July 1, 2015, end delete begin insert smartphone, as defined, that is manufactured on or after July 1, 2015, and sold in California after that date, end insert include a technological solution, which may consist of software, hardware, or both software and hardware, that can render inoperable the essential begin delete features of the device, end delete begin insert features, end insert as defined, begin insert of the smartphone end insert to an unauthorized user when the begin delete device end delete begin insert smartphone end insert 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 begin delete device end delete begin insert smartphone end insert on a wireless network except by the rightful owner or his or her authorized designee. The bill would make these requirements inapplicable when the begin delete device end delete begin insert smartphone end insert is resold in California on the secondhand market or is consigned and held as collateral on a loan. The bill would prohibit the sale of begin delete an advanced mobile communications device in California end delete begin insert a smartphone that is manufactured on or after July 1, 2015, and sold in California after that date, end insert unless, during the begin delete activation and registration process, the device’s default setting prompts end delete begin insert initial device set-up process, the smartphone’s default setting is to prompt end insert the user to enable the technological solution. The bill would authorize the rightful owner to affirmatively elect to disable the technological solution at begin delete the point of sale, during the activation and registration process, or anytime thereafter. end delete begin insert anytime. end insert The bill would make a begin insert knowing end insert violation of the bill’s requirements begin insert by a retail entity end insert subject to a civil penalty of not less than $500, nor more than $2,500, for each violation. begin insert The bill would limit an enforcement action to being brought by the Attorney General, a district attorney, or city attorney, and would prohibit any private right of action to enforce the bill’s requirements. end insert

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.

begin delete

(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)

end delete

begin insert (g) end insert  In order to be effective, begin delete these end delete begin insert antitheft end insert 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, begin delete and be enabled by default, with
consumers being given end delete begin insert come preequipped, and the default setting
of the solution shall be to prompt the user to enable the solution
during the initial device set up. Consumers should have end insert the option
to affirmatively elect to disable this protection.

begin delete

(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
offered for sale in California to come with a technological solution
enabled, in order to deter theft and protect consumers.

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:

begin delete

(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 is limited to what are commonly known as smartphones.

(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.

end delete begin insert

(1) (A) “Smartphone” means a cellular radio telephone or
other mobile voice communications handset device that includes
all of the following features:

end insert begin insert

(i) Utilizes a mobile operating system.

end insert begin insert

(ii) Possesses advanced computing capability.

end insert begin insert

(iii) Has wireless network connectivity.

end insert begin insert

(iv) Is capable of operating on a long-term evolution network
and successor wireless data network communication standards.

end insert begin insert

(B) A smartphone may possess, but is not limited to, the
following capabilities:

end insert begin insert

(i) Built-in mobile software applications.

end insert begin insert

(ii) Internet access.

end insert begin insert

(iii) Digital voice service.

end insert begin insert

(iv) Text messaging.

end insert begin insert

(v) The ability to send and receive electronic mail.

end insert begin insert

(vi) Internet Web site browsing.

end insert begin insert

(C) A “smartphone” does not include a radio cellular telephone
commonly referred to as a “feature” or “messaging” telephone,
a laptop, a tablet device, or a device that only has electronic
reading capability.

end insert begin delete

(3)

end delete

begin insert (2) end insert  “Essential features” of begin delete an advanced mobile communications
device end delete begin insert a smartphone end insert include the ability to use the device for voice
communications and the ability to browse the Internet, including
the ability to access and use mobile software applications
commonly known as “apps.” “Essential features” does not include
any functionality needed for the operation of the technological
solution.

begin delete

(4)

end delete

begin insert (3) end insert  “Hard reset” means the restoration of begin delete an advanced mobile
communications device end delete begin insert a smartphone end insert to the state it was in when
it left the factory, and refers to any act of returning a begin delete device end delete
begin insert smartphone end insert to that state, including processes commonly termed a
factory reset or master reset.

begin delete

(5)

end delete

begin insert (4) end insert  “Sold in California” means that the begin delete advanced mobile
communications device end delete begin insert smartphone end insert is sold at retail from a location
within the state, or the begin delete advanced mobile communications device end delete
begin insert smartphone end insert is sold and shipped to an end-use consumer at an
address within the state. “Sold in California” does not include a
begin delete device end delete begin insert smartphone end insert that is resold in the state on the secondhand
market or that is consigned and held as collateral on a loan.

(b) (1) Any begin delete advanced mobile communications device that is
manufactured and sold in California on or after July 1, 2015, shall
include a technological solution that can render the essential
features of the device inoperable to an unauthorized user when the
device end delete begin insert smartphone that is manufactured on or after July 1, 2015,
and sold in California after that date, shall include a technological
solution, to be provided by the manufacturer or operating system
provider, that can render the essential features of the smartphone
inoperable to an unauthorized user when the smartphone end insert 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 begin delete device end delete begin insert smartphone end insert after the essential features of the begin delete device end delete
begin insert smartphone end insert 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 begin delete device end delete begin insert smartphone end insert on a
wireless network except by the rightful owner or his or her
authorized designee. No begin delete advanced mobile communications device end delete
begin insert smartphone end insert begin insert that is manufactured on or after July 1, 2015, end insert may be
sold in California begin insert after that date end insert unless, during the begin delete activation and
registration process, the device’s default setting prompts end delete begin insert initial
device set-up process, the smartphone’s default setting is to prompt end insert
the user to enable the technological solution.

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

(3) The rightful owner of begin delete an advanced mobile communications
device end delete begin insert a smartphone end insert may affirmatively elect to disable the
technological solution at begin delete the point of sale, during the activation
and registration process, or anytime thereafter. end delete begin insert anytime. end insert 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.

(c) A begin delete person or end delete retail entity begin delete selling an advanced communications
device end delete begin insert that knowingly sells a smartphone end insert in California in violation
of subdivision (b) begin delete shall end delete begin insert may end insert 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 insert A suit to
enforce this section may only be brought by the Attorney General,
a district attorney, or a city attorney. There is no private right of
action to enforce this section. end insert

begin insert

(d) The seller of a smartphone, its employees, and its agents,
are not liable to any person for civil damages resulting from, or
caused by, failure of a technological solution, including any hack
or other third-party circumvention of the technological solution.
A failure due to hacking or other third-party circumvention may
be considered a violation for purposes of subdivision (c), only if,
at the time of sale, the seller had received notification from the
manufacturer that the failure existed and that it cannot be remedied
by a patch or other technological solution.

end insert begin delete

(d)

end delete

begin insert (e) end insert  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.

begin insert

(f) Nothing in this section prohibits a network operator, device
manufacturer, or operating system provider from offering a
technological solution or other service in addition to the
technological solution required to be provided by the device
manufacturer or operating system provider pursuant subdivision
(b).

end insert begin delete

(e)

end delete

begin insert (g) end insert  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:

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

(2) Participation in the wireless emergency alert system.

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