BILL ANALYSIS Ó
SB 962
Page 1
Date of Hearing: June 23, 2014
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 962 (Leno) - As Amended: June 12, 2014
SENATE VOTE : 26-8
SUBJECT : Smart phones
SUMMARY : This bill would require a smartphone, as defined, to
include a feature that would allow for deactivation of all
essential features, as defined, of that smartphone and prevent
reactivation by someone who is not the rightful owner.
Specifically, this bill :
1)Defines smartphones and essential features.
2)Applies to smartphones manufactured after July 1, 2015.
3)Establishes liability for knowingly selling smartphones
without the deactivation feature.
4)Specifies civil penalties of $500 to $2,500 per smartphone
when a smartphone is knowingly sold without the deactivation
feature.
5)Specifies that the seller of a smartphone is not liable to any
person for civil damages caused by the failure of a
technological solution, including any hack or other
third-party circumvention.
6)Specifies that a failure due to hacking or other third-party
circumvention may be considered a violation if, at the time of
sale, the seller had received notification from the
manufacturer that the failure existed and could not be
remedied by a patch or other technological solution.
7)Specifies enforcement through the Attorney General, district
attorney, or city attorney and that there is no private right
of enforcement.
EXISTING LAW
a)Provides that petty theft - the stealing, taking, or driving
SB 962
Page 2
away with the personal property of another - is a misdemeanor
when the value of the property does not exceed $950 and is
punishable by fines and up to six months in the county jail.
(Penal Code Sections 484, 487, 488, and 490)
b)Requires all providers of wireless and Internet-based
communications services to enable customers to call 911 for
emergency services, and establishes dates for enabling text to
911 and Next Generation 911. (Government Code Sections
53100-53120)
FISCAL EFFECT : None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS :
1)Author's statement. According to the author, "SB 962 will
require any smartphone sold in California to include a
technological solution that renders the essential features of
the device inoperable when stolen. Such solutions remove the
incentive for thieves by eliminating the device's value on the
secondary market. As a result, this legislation will go a long
way towards ending the epidemic of smartphone theft and
ensuring Californians are safeguarded from theft."
2)The stolen smartphone problem . According to the sponsor,
recent years have seen a surge in smartphone theft, with such
thefts now accounting for one-third of all robberies in the
United States. Consumer Reports estimates that 3.1 million
Americans were victims of smartphone theft in 2013 - up from
2.1 million victims in 2012.
Here in California, the sponsor reports that smartphone theft
now accounts for 60% of all robberies in San Francisco and up
to 75% of all robberies in Oakland. The City of Los Angeles
has experienced a 26% increase in smartphone thefts since
2011.
Of course, some traditional approaches to slow the growth of
the problem have had some success. For example, a recent
SFBay.com news article from May 13, 2014 reported that the San
Francisco Municipal Transit Agency reported a 30% overall drop
in crime and a 77% decline in smartphone thefts as a result of
SB 962
Page 3
simply hiring more police officers to patrol the transit
system - a strategy made possible by a $1 million federal
grant. Unfortunately, this strategy is resource intensive and
may be hard to replicate broadly.
3)Industry addressing the problem . The telecommunications
industry has taken steps to combat the problem. According to
CTIA - The Wireless Industry, the industry supports a
"Smartphone Anti-Theft Voluntary Commitment" that requires
signatories to agree that all models of smartphone made for
sale in the US after July 1, 2015 must have a free,
pre-equipped technological solution to remote-wipe a lost
phone, render a phone inoperable to an unauthorized user,
prevent reactivation without permission, and reverse
inoperability if recovered. The following companies are listed
as signatories: Apple, Asurion, AT&T, Google, HTC America,
Huawei Device USA, LG Electronics MobileComm USA, Motorola
Mobility LLC, Microsoft, Nokia, Samsung Telecommunications
America, Sprint, T-Mobile USA, US Cellular, Verizon Wireless
and ZTE USA.
The telecommunications industry has also established a stolen
device database in an attempt to locate stolen smartphones
when they are reactivated anywhere in the world.
4)Will remote deactivation solve the problem? One year ago the
New York State Attorney General and the San Francisco Attorney
General launched "Secure our Smartphones" (SOS) to address
mobile device theft, citing an epidemic of smart phone theft
and related crime. They posited that by deactivating a mobile
phone it will become worthless. Since the campaign was
launched Microsoft has confirmed they will incorporate theft
deterrence in their next versions of Windows Phone operating
systems that run on all Nokia smart phones and Google is doing
the same for smartphones that use Android operating systems.
Apple already as an antitheft deterrence solution. A report
issued on June 19, 2014 states that since Apple began offering
its antitheft solution theft of Apple devices fell by 17
percent in New York City and 38% in San Francisco.
However, thieves may continue to find value in deactivated
smartphones for their parts value.
5)Technical issues . Several technical issues with the bill were
raise by industry, discussed below.
SB 962
Page 4
a) Definition of the subject technology. The bill includes
a specific definition of a smartphone. It also includes a
provision that specifies what is not a "smartphone." This
includes laptops, tablets, or electronic reading devices.
The June 12, 2014 version of this bill removed the phrase
"radio cellular telephone commonly referred to as a
"feature" or "messaging" telephone." A feature phone is
typically a mobile phone with limited capabilities and is
generally a lower cost customer option. Without a
definition of a feature phone there is a potential that
manufacturers could work around the requirements of this
bill by designating their devices as feature phones instead
of smart phones because there is no definition of a feature
phone. Feature phones are becoming available that have some
of the same capabilities as smartphones. However, these
limited-capability phones may not have either the hardware
or software capability (memory, speed) to comply with the
provisions of SB 962. The author is committed to working
with both the Assembly Business & Professions and Utilities
& Commerce Committee on solutions to this potential
"Catch-22." Therefore the phrase referencing feature phones
is a proposed amendment.
b) Hard reset. The definition of "hard reset" could be
simplified by just stating "through" processes instead of
any act of returning a smartphone to its original factory
settings.
c) Opt out. The bill includes a provision that allows the
authorized user to disable or opt-out of the feature that
allows remote deactivation. The remote deactivation feature
may require the user to activated location identification
which some users find objectionable. This provision allows
users to choose whether or not to enable the
remote-deactivation feature. Suggested clarifying
amendments allow users to opt out at any time and conform
terminology in the bill.
d) Civil penalties. Clarifying amendments are needed to
ensure that penalties are for damages that result for
smartphones that violate this subdivision.
e) Business, Professions and Consumer Protection Committee
amendments. Amendments were adopted in Assembly Business,
SB 962
Page 5
Professions and Consumer Protection Committee on June 14,
2014. These amendments are incorporated in the proposed
amendments in this analysis.
f) Terminology clean up. In various places in this bill the
word "device" should be replaced with the word
"smartphone."
1)Support and Opposition.
Supporters argue that the deactivation feature will act as a
deterrent to and decrease thefts.
Opponents argue that there is no single solution to smartphone
theft and that this is a global problem that will require a
multilayered, comprehensive approach. They also point out that
manufacturers use different technologies and that they do not
control the operating system. Additional concerns regarding a
state-specific mandate for products sold globally stifle
innovation and competition.
2)Proposed amendments
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
SB 962
Page 6
the trade has become.
(g) In order to be effective, antitheft technological
solutions need to be ubiquitous, as thieves cannot distinguish
between those mobile communications devices smartphones 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, come preequipped, and the
default setting of the solution shall be to prompt the
consumer to enable the solution during the initial device
setup. Consumers should have the option to affirmatively elect
to disable this protection, but it must be clear to the
consumer that the function the consumer is electing to disable
is intended to prevent the unauthorized use of the device.
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) (A) "Smartphone" means a cellular radio telephone or other
mobile voice communications handset device that includes all
of the following features:
(i) Utilizes a mobile operating system.
(ii) Possesses the capability to utilize mobile software
applications, access and browse the Internet, utilize text
messaging, utilize digital voice service, and send and receive
email.
(iii) Has wireless network connectivity.
(iv) Is capable of operating on a long-term evolution network
or successor wireless data network communication standards.
(B) 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.
(2) "Essential features" of a smartphone are the ability to
use the device smartphone for voice communications, text
messaging, and the ability to browse the Internet, including
the ability to access and use mobile software applications.
"Essential features" do not include any functionality needed
for the operation of the technological solution, nor does it
include the ability of the smartphone to access emergency
services by a voice call or text to the numerals "911," the
ability of a device smartphone to receive wireless emergency
alerts and warnings, or the ability to call an emergency
number predesignated by the owner.
(3) "Hard reset" means the restoration of a smartphone to the
SB 962
Page 7
state it was in when it left the factory, and refers to any
act of returning a smartphone to that state, including through
processes commonly termed a factory reset or master reset.
(4) "Sold in California," or any variation thereof, means that
the smartphone is sold at retail from a location within the
state, or the smartphone is sold and shipped to an end-use
consumer at an address within the state. "Sold in California"
does not include a smartphone that is resold in the state on
the secondhand market or that is consigned and held as
collateral on a loan.
(b) (1) Any smartphone that is manufactured on or after July
1, 2015, and sold in California after that date, shall include
a technological solution at the time of sale, to be provided
by the manufacturer or operating system provider, that, once
initiated and successfully communicated to the smartphone, can
render the essential features of the smartphone inoperable to
an unauthorized user when the smartphone is not in the
possession of an authorized user. The smartphone shall, during
the initial device set-up process, prompt an authorized user
to enable the technological solution. The technological
solution shall be reversible, so that if an authorized user
obtains possession of the smartphone after the essential
features of the smartphone have been rendered inoperable, the
operation of those essential features can be restored by an
authorized user. A technological solution may consist of
software, hardware, or a combination of both software and
hardware, and when enabled, shall be able to withstand a hard
reset or operating system downgrade and shall prevent
reactivation of the smartphone on a wireless network except by
an authorized user.
(2) An The authorized user of a smartphone may affirmatively
elect to disable or opt-out of enabling the technological
solution during the initial device set-up process and may
disable the technological solution at any time. However, the
physical acts necessary to disable or opt out of enabling the
technological solution may only be performed by the end-use
consumer authorized user or a person specifically selected by
the end-use consumer authorized user to disable or opt out of
enabling the technological solution.
(c) The knowing retail sale of a smartphone in California in
violation of subdivision (b) may 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
smartphone sold in California in violation of this section . A
suit to enforce this section subdivision may only be brought
SB 962
Page 8
by the Attorney General, a district attorney, or a city
attorney. A failure of the technological solution due to
hacking or other third-party circumvention may be considered a
violation for purposes of this subdivision, only if, at the
time of sale, the seller had received notification from the
manufacturer or operating system provider that the
vulnerability cannot be remedied by a software patch or other
solution. There is no private right of action to enforce this
section subdivision .
(d) The retail sale in California of a smartphone shall not
result in any civil liability to the seller and its employees
and agents from that retail sale alone if the liability
results from or is caused by failure of a technological
solution required pursuant to this section, including any
hacking or other third-party circumvention of the
technological solution, unless at the time of sale the seller
had received notification from the manufacturer or operating
system provider that the vulnerability cannot be remedied by a
software patch or other solution. Except as provided in
subdivision (c), nothing Nothing in this subdivision precludes
a suit for civil damages on any other basis outside of the
retail sale transaction, including, but not limited to, a
claim of false advertising.
(e) 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.
(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).
(g) 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.
REGISTERED SUPPORT / OPPOSITION :
SB 962
Page 9
Support
Alameda County District Attorney's Office
Associated Students of the University of California (ASUC)
Association of Orange County Deputy Sheriffs Association
Berkeley City Council
California District Attorneys Association (CDAA)
California Fraternal Order of Police
California Pawnbrokers Association
California Police Chiefs Association Inc.
California State Sheriffs' Association
California Transit Association
City of Los Angeles
City of Los Angeles Mayor Eric Garcetti
City of Oakland
City of San Diego
City of San Francisco
City of Santa Ana
City of Thousand Oaks
Consumer Action
Consumer Federation of California (CFC)
Consumers Union
Crime Victims United of California (CVUC)
George Gascon, District Attorney, City and County of San
Francisco
Hayward Police Department
Individual Letters (8)
League of California Cities
Long Beach Police Officers Association
Los Angeles County District Attorney's Office
Los Angeles Professional Peace Officers Association
Metropolitan Police Service
Michael N. Feuer, Los Angeles City Attorney
Neighborhood Crime Prevention Councils of Oakland
Oakland City Council
Rebecca D. Kaplan, City Council Pro Tem, City of Oakland
Sacramento County Deputy Sheriffs Association
San Francisco Bay Area Transit District (BART)
San Francisco Bay Area Transit District Police Department
San Francisco Municipal Transportation Agency (SFMTA)
San Jose Silicon Valley Chamber of Commerce (SJSV Chamber)
San Mateo County Chiefs Association
San Mateo County Sheriffs Association
Santa Ana Police Officers Association
SB 962
Page 10
Sean C. Whent, Interim Chief of Police, Oakland Police
Department
Secure Our Smartphones (S.O.S.) Initiative
Temescal Merchants Association
The Utility Reform Network (TURN)
Opposition
CalChamber
CTIA
Los Angeles Chamber of Commerce
Silicon Valley Leadership Group
TechAmerica
TechNet
Analysis Prepared by : Susan Kateley / U. & C. / (916)
319-2083