BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 281 (Gallagher) - Collateral recovery
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|Version: June 16, 2015 |Policy Vote: B., P. & E.D. 9 - |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 17, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: AB 281 would establish a Collateral Recovery
Disciplinary Review Committee (DRC) within the Bureau of
Security and Investigative Services (BSIS) by July 1, 2017 to
consider appeals of administrative fines and decisions to deny a
license. The bill would also make a number of changes to the
Collateral Recovery Act related to repossession agencies.
Fiscal
Impact:
Estimated BSIS costs of approximately $14,000 annually to hold
four DRC hearings. (Private Security Services Fund)
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BSIS staff costs of approximately $33,000 annually for 0.5 PY
of administrative workload associated with DRC activities.
(Private Security Services Fund)
Minor and absorbable costs to make necessary IT changes to the
BreEZe system. (Private Security Services Fund)
Likely minor costs, if any, to local agencies, including law
enforcement entities, to provide a specified notice to owners
of towed or stored vehicles. While the bill is keyed as a
mandate, this provision is not likely to impose significant
costs on local agencies because towing companies and impound
lots are not generally owned or operated by local agencies.
Staff assumes that any costs to provide the specified notice
could be offset by increased towing and storage charges, to
the extent local agencies own or operate towing or storage
facilities.
Background: Pursuant to existing law, the BSIS, within the Department of
Consumer Affairs (DCA), licenses and regulates approximately
380,000 companies and employees serving in the areas of alarm
services, locksmith services, private investigation, private
security, repossession, and firearm and baton training. Based
on the past three fiscal years, the BSIS issues an average of
1,900 company licenses, 71,000 employee registrations, and
12,000 Bureau firearm permits annually. In addition, the BSIS
renews an average of 9,500 company licenses, 105,000 employee
registrations, and 11,500 Bureau firearm permits each year. The
BSIS is responsible for regulating the following six areas of
state law: the Alarm Company Act; the Locksmith Act; the Private
Investigator Act; the Private Security Services Act; the
Proprietary Security Services Act; and the Collateral Recovery
Act.
Existing law provides for the licensure and regulation of
licensed repossession agencies (LRAs), repossessors, and
repossessor qualified managers by the BSIS under the under the
Collateral Recovery Act (Act), and defines an LRA as any person
who, for any consideration whatsoever, engages in the business
or accepts employment to locate or recover collateral. The BSIS
is authorized to deny a license if the applicant has violated
specified provisions. Existing law authorizes the Director of
DCA to impose administrative fines against any licensee for
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specified acts. Existing law also establishes adjudicatory
procedures for hearings of BSIS actions to deny, suspend, or
revoke licenses.
Existing law currently provides for three DRCs within BSIS; the
Private Security Services Act establishes two DRCs (one each in
Northern and Southern California), and the Alarm Company Act
establishes one DRC. The DRCs provide their respective
applicants and licensees an alternate path to appeal BSIS
decisions to assess administrative fines or deny, suspend, or
revoke licenses.
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, legal, or registered owner may
contract with a repossession agency to locate and recover viable
collateral for resale, with the proceeds going towards the
outstanding loan amount.
The Collateral Recovery 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 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 BSIS, 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.
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Proposed Law:
AB 281 would require the Governor to appoint a Collateral
Recovery DRC, comprised of five specified members, and authorize
a person licensed under the Collateral Recovery Act to appeal
the assessment of administrative fines and decisions to deny a
license. The bill requires a request for appeal to the DRC to
be made in writing within 30 days of the action against the
licensee, and requires the appellant to be notified of the DRC's
decision within 30 days. If the appellant disagrees with the
DRC's decision, he or she may request a hearing pursuant to
current appeals procedures within 30 days of the DRC's decision.
The bill would also make specified changes to the Collateral
Recovery Act, including the following:
Define the term "repossession" to mean recovering collateral
by means of an assignment by the legal owner, lien-holder,
lessor, lessee or registered owner.
Authorize a licensed repossessor to display a hardcopy
printout or electronic copy, including a screenshot, of the
BSIS approval of a license application from its website, which
may be used to prove licensure.
Prohibit a licensed repossessor from performing or charging
for repair work, cleaning, or detailing of any collateral
recovered.
Authorize an LRA to make a good faith effort to inventory any
personal effects of value through either a written or
photographic inventory, rather than making a complete and
accurate inventory of personal items.
Prescribes requirements for repossessors to follow when unable
to open a trunk, glove box, or other compartment.
Make other changes regarding personal effects and inventory,
and prohibit a licensee from selling these items and remitting
proceeds to a third party, including any lending institution.
Require an LRA to provide an annual notice of specified
inventory and reporting requirements of a repossessor agency
to a legal owner from which the agency accepts an assignment.
Authorize a repossession agency to provide to an insurance
company, the name, driver's license number, and date of birth
of a licensee, registrant, qualified certificate holder,
qualified manager, employee, or any independent contractor the
agency employs for the purpose of verifying information for
the issuance or renewal of an insurance policy.
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Require the legal owner of collateral to indemnify and hold
harmless the state, law enforcement agency, city, county, a
tow yard, storage facility, or an impounding yard from any
damage to the collateral after it is released, as specified,
if the collateral was legally released.
Require a person, including the state, city, county, law
enforcement agency, tow yard, storage facility, an impounding
lot, or a business entity that charges for towing and/or
storage, to provide a copy of the Towing Fees and Access
Notice to any owner or operator of a towed or stored vehicle,
as specified.
Make other minor, technical, and clarifying changes to the
Act.
Related
Legislation: AB 921 (Jones), currently pending on the Senate
Floor, would establish a Private Investigator DRC within the
BSIS to consider appeals of administrative fines and decisions
to deny, suspend, or revoke a license.
Staff
Comments: This bill is intended to provide an alternative and
expedited procedure for review of assessments of fines against a
licensee or actions to deny a license issued under the
Collateral Recovery Act. The current administrative process for
contesting a fine or appealing a license decision can be
lengthy. DCA indicates that any costs to develop and adopt
regulations specifying a DRC process would be minor since BSIS
currently has three other DRCs that can be used as a model that
could be easily replicated. BSIS estimates that, based upon the
number of citations and license actions, the DRC would hold four
hearings annually at a cost of approximately $3,500 per hearing.
The bill would also update and clarify the duties and
responsibilities of the repossessors. None of these provisions
are projected to have a state fiscal impact.
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