BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 281


                                                                    Page  1





          Date of Hearing:  May 6, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          281 (Gallagher) - As Amended April 22, 2015


           ----------------------------------------------------------------- 
          |Policy       |Business and Professions       |Vote:|14 - 0       |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |-------------+-------------------------------+-----+-------------|
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |-------------+-------------------------------+-----+-------------|
          |             |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:


          This bill establishes a Collateral Recovery Disciplinary Review  
          Committee (DRC) within the Bureau Security Investigative  
          Services (Bureau) to review a request of a licensee to contest  








                                                                     AB 281


                                                                    Page  2





          an administrative fine or to appeal the denial of a license;  
          prohibits licensed repossessors from performing repair work on  
          collateral; and authorizes licensed repossessors to display a  
          printout of their registration or a screenshot of their  
          registration from the Bureau's website. 


          FISCAL EFFECT:


          Ongoing costs of approximately $47,000 annually (special funds)  
          to the Bureau for a half-time staff services analyst (SSA)  
          position and four hearings per year associated with the new DRC.


          COMMENTS:


          1)Purpose. According to the author, "[This bill] clarifies the  
            job description of repossessors, promotes flexibility, and  
            establishes a DRC - a proven mechanism to save time and  
            taxpayer dollars."


          2)Background.  When a debtor defaults on payments for a home,  
            vehicle or product, the creditor is authorized to collect and  
            resell the collateral to defray the delinquent amount owed by  
            the debtor.  Under existing law, a creditor may use a  
            collections agency to recover loan payments in default from  
            customers, and if that is unsuccessful, a creditor may hire a  
            licensed repossession agency (LRA) to recover viable  
            collateral for resale, with the proceeds going towards the  
            outstanding loan amount.  


            The Act prohibits repossessors from performing those duties  
            unless he or she has in his or her possession a valid  
            repossessor registration card or evidence of a valid temporary  
            registration or registration renewal.  The Act also requires  








                                                                     AB 281


                                                                    Page  3





            every person engaged in repossession activities to display his  
            or her valid pocket identification card issued by the Bureau.   
            However, the Act authorizes a person to perform repossession  
            activities pending receipt of a registration card if the  
            person has been approved by the Bureau and carries on his or  
            her person a hardcopy printout or electronic copy of the  
            Bureau's approval from the Bureau's website and valid picture  
            identification.  


            According to the Bureau, during Fiscal Year 2013-14, there  
            were approximately 309 actively licensed LRAs, 891 actively  
            licensed repossessors and 330 actively licensed repossessor  
            qualified managers operating in California.


            There are three DRCs within Bureau. The Private Security  
            Services Act establishes two DRCs, and the Alarm Company Act  
            establishes one DRC. The DRCs provide their respective  
            applicants and licensees an alternate path to appeal the  
            Bureau's decisions to deny, suspend, or revoke licenses, or  
            assessments of administrative fines. 


          3)Current Legislation.  AB 921 (Jones), also before this  
            committee, would establish a DRC for private investigators.  


          4)Prior Legislation.  AB 791 (Hagman), Chapter 340, Statutes of  
            2013, among other things, prohibited an LRA or its registrants  
            from making a demand for payment in lieu of repossession, and  
            prohibited an LRA from selling collateral recovered under the  
            Act. 





          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  








                                                                     AB 281


                                                                    Page  4





          319-2081