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