BILL ANALYSIS Ó
AB 265
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CONCURRENCE IN SENATE AMENDMENTS
AB
265 (Holden)
As Amended June 23, 2015
Majority vote
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|ASSEMBLY: | 77-0 | (April 30, |SENATE: | 38-0 | (July 13, 2015) |
| | |2015) | | | |
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Original Committee Reference: P. & C.P.
SUMMARY: Requires a buy-here-pay-here (BHPH) automobile dealer
to provide five days' notice to consumers with weekly payment
term contracts, or 10 days' notice on all other contracts,
before using starter interrupt technology to disable an
automobile after the consumer defaults on a finance payment, and
increases the maximum fine amount for violations from $1,000 to
$2,000. Specifically, this bill:
1)Amends the written disclosure provided to the buyer at the
time of sale to inform the buyer that a warning will be
provided five days before the use of the starter interrupt
technology for all weekly payment term contracts, and 10 days
before the use of starter interrupt technology for all other
contracts.
2)Specifies that the written disclosure must inform the buyer
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that in event of an emergency, the buyer will be provided with
the ability to start a dealer-disabled vehicle for no less
than 24 hours after the vehicle's initial disablement.
3)Increases the penalty for violation of BHPH dealer consumer
notice requirements, with each violation being a misdemeanor
punishable by a fine not exceeding $2,000.
4)Declares that no reimbursement is required pursuant to 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, changes the penalty for a crime or
infraction, or changes the definition of a crime.
The Senate amendments:
1)Reduce the warning period provided to the buyer for all weekly
payment term contracts from 10 days to five before starter
interrupt technology may be used.
2)Specify that a 10-day notification period applies to all other
contracts.
3)Clarify that the written disclosure provided to the buyer at
the time of sale must inform the buyer that in the event of an
emergency, the buyer will be provided with the ability to
start a dealer-disabled vehicle for no less than 24 hours
after the vehicle's initial disablement.
4)Increase the fine for each violation of Civil Code Section
2983.37 from $1,000 to $2,000.
FISCAL EFFECT: According to the Senate Appropriations
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Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
This bill is intended to provide consumers who purchase
automobiles from BHPH dealers with an additional measure
protection by requiring the dealer to provide an initial notice
to a consumer (five days for weekly payment term contracts, and
10 days for all others), in addition to a final 48-hour notice,
before it can disable the car remotely with a starter interrupt
device after a missed loan payment. The measure also doubles
the maximum penalty for a violation from $1,000 to $2,000. This
bill is author-sponsored.
State law broadly defines a BHPH car dealer as one that sells or
leases an automobile to a consumer, but maintains most of the
financing interest rather than assigning it to a bank or other
lender. Put another way, the BHPH dealer and lender are
generally the same entity - loan payments are made to the same
entity that sold the car.
In practice, BHPH arrangements are considered more financially
risky, and are aimed at individuals with poor or no credit
histories or those with a low credit score who would otherwise
have difficulty getting financing for a car, and who pay higher
interest rates to the BHPH dealer as a result. BHPH customers
are also often required to make loan repayments on a bi-monthly
or even weekly basis.
Under current law, a BHPH dealer that wishes to use starter
interrupt technology on a car must notify the buyer in writing
at the time of sale, and provide a separate notice to the
consumer at least 48 hours before the technology would be used.
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Buyers must also be provided with the ability to restart a
disabled vehicle for at least 24 hours in the event of an
emergency. A violation of these and other protections is a
misdemeanor punishable by a fine of up to $1,000.
Analysis Prepared by:
Hank Dempsey / P. & C.P. / (916) 319-2200 FN:
0001189