BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 281|
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THIRD READING
Bill No: AB 281
Author: Gallagher (R)
Amended: 8/17/15 in Senate
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 6/15/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/17/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for
vote
SUBJECT: Collateral recovery
SOURCE: California Association of Licensed Repossessors
DIGEST: This bill establishes a Collateral Recovery
Disciplinary Review Committee within the Bureau of Security and
Investigative Services to review a request of a licensee to
contest administrative actions or fines. This bill prohibits
licensed repossessors from performing repair work on collateral
and removes provisions authorizing repossessors to make demands
for payment in lieu of repossession. This bill also makes
numerous technical, updating, and conforming changes to both the
Business and Professions Code and Vehicle Code relating to the
work of repossessors.
AB 281
Page 2
ANALYSIS:
Existing law:
1) Provides for the licensure and regulation of licensed
repossession agencies (LRAs), repossessors, and repossessor
qualified managers by the Bureau under the Collateral
Recovery Act (Act), which governs collateral repossessions.
(Business and Professions Code (BPC) § 7500 et seq.)
2) Authorizes a person to perform the duties of a registrant
pending receipt of a registration card if the person has been
approved by the Bureau of Security and Investigative Services
(Bureau) and carries on his or her person a hardcopy printout
of the Bureau's approval from the Bureau's website and valid
picture identification. (BPC § 7506.9(e))
3) Authorizes licensed repossessors to charge owners for repair
work on collateral, if expressly authorized to do so. (BPC
§7507.5)
4) Requires that all personal effects be removed from the
recovered collateral. Requires a complete and accurate
inventory of the personal effects be made, labeled, and
stored by the licensee for a minimum of 60 days.
(BPC § 7507.9)
5) Prohibits a licensee from falsifying or altering an
inventory. (BPC § 7508.2(f))
6) Requires the person taking a vehicle by or on behalf of its
legal owner under the terms of a security or lease agreement,
to contact the city police, sheriff, or campus police
department where the taking of possession occurred within one
hour after taking possession of the vehicle by the most
expeditious means available. (Vehicle Code (VEH) § 28)
7) Requires the legal owner to indemnify and hold harmless a
storage facility from any claims arising out of the release
of the vehicle and from any damage to the vehicle after its
release. (VEH § 14602.6)
AB 281
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This bill:
1) Establishes a Collateral Recovery Disciplinary Review
Committee (DRC) within the Bureau to review a request from a
licensee to contest an administrative fine or appeal the
denial of a license.
a) The members of the DRC will consist of five members
appointed by the Governor: three members actively engaged
in the business of a licensed repossession agency and two
public members. Each member of the DRC will be appointed
for a term of four years.
b) Requires a licensee or applicant for a license, to
request review by written notice to the DRC within 30 days
of the issuance of a citation and requires the DRC to
notify the appellant within 30 days of the review of the
DRC's decision.
c) Authorizes an appellant who disagrees with the DRC's
decision to request a formal administrative hearing within
30 days of the DRC's notification of decision otherwise
the DRC's decision is final.
d) Requires the DRC to meet as frequently required and
authorizes members of the DRC to be paid per diem and
reimbursed for actual travel expenses.
2) Authorizes a licensed repossessor to display a hardcopy
printout or electronic copy, including a screenshot, of the
Bureau's approval from the Bureau's website.
3) Prohibits a licensed repossessor from performing or
charging for repair work, cleaning, or detailing of any
collateral recovered.
4) Updates the method repossessors use to locate collateral
by removing the reference to "skip trace" and replacing the
term with "look for".
5) Defines the term "repossession" to mean recovering
collateral by means of an assignment by the legal owner,
lien-holder, lessor, lessee or registered owner.
AB 281
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6) Defines the term "registered owner" to mean the individual
listed in the records of the Department of Motor Vehicles, on
a conditional sales contract, or on a repossession
assignment.
7) Authorizes a repossession agency to make a good faith
effort to inventory any personal effects of value through
either a written or photographic inventory.
8) Prohibits a repossession agency to inventory or remove any
trash in recovered collateral.
9) Requires a licensee that is unable to open a trunk, glove
box, or any other compartment, to contact the legal owner of
the recovered collateral. Within 72 hours of this
notification, the registered owner must provide the licensee
with either a key or authorize a key to be made (at the
registered owner's expense) in order for the licensee to
inventory the contents of the inaccessible compartment.
10)Authorizes a repossession agency to store any personal
effects inside the collateral until the collateral is no
longer in the possession of the repossession agency.
11)Authorizes a repossession agency to allow a registered owner
or person in possession of the vehicle to sign a waiver
forfeiting any personal effects not covered by a security
agreement. Authorizes a repossession agency to dispose of
these forfeited personal effects immediately after obtaining
the signed waiver from the registered owner or person in
possession of the vehicle.
12)Prohibits a repossession agency from selling any personal
effects not secured by a security agreement and remitting the
money from the sale to a third party, including any lending
institution.
13)Prohibits a licensee from releasing or conspiring to release
the personal effects or other personal property not covered
by a security agreement to anyone other than the debtor or
person in possession of the collateral at the time of the
repossession.
AB 281
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14)Requires a licensed repossessor agency to provide a notice
of the above mentioned inventory and reporting requirements
of a repossessor agency to a legal owner from which the
agency accepts an assignment on or before January 31 of each
year.
15)Prohibits a repossession agency from disclosing, to the
public, any person or nongovernmental entity's residence
address, residence telephone number, cellular telephone
number, driver's license number, work schedule, and the past,
present, or future location, of any licensee, registrant,
qualified certificate holder, qualified manager, employee, or
any independent contractor the agency employs without a court
order.
16)Authorizes 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.
17)Mandates the tow yard, storage facility, or impounding yard
to direct the registered owner of a recovered vehicle to the
city police, sheriff, or campus police department of the
jurisdiction in which the collateral was recovered.
Prohibits the person taking possession of the recovered
vehicle on behalf of the vehicle's legal owner from notifying
the law enforcement department of the jurisdiction of the tow
yard, storage facility, or impounding yard of the removal.
18)Requires the legal owner of collateral to indemnify and hold
harmless the state, law enforcement agency, city, country,
tow yard, storage facility, or impounding yard from a claim
arising out of the release of collateral to a licensed
repossessor or LRA and from any damage to the collateral
after its release.
19)Makes other technical clean up references to correct code
sections in the Act.
Background
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Under current law, licensed repossessors must remove all
personal effects in recovered collateral, provide a complete and
accurate written inventory of all items, and provide the
inventory to a debtor within 48 hours after the recovery of the
collateral. These personal effects must be stored by the
licensee in a secure location for a minimum of 60 days, after
which a licensee may dispose of these items. Any personal
effects that have been disposed of are filed in a permanent
record that the licensee must retain for four years.
However, written inventories are not always the most accurate,
as oftentimes items cannot be identified and are mislabeled by
the licensee who is conducting the inventory. The industry has
pointed out that items, such as makeshift drug paraphernalia or
other unrecognizable personal effects are misidentified because
the licensee conducting the inventory does not know or cannot
recognize the item. Photographs of the debtor's personal
effects provide a more accurate inventory because identification
through a description of the items is not left up to the
licensee's interpretation. In addition, many licensees already
use tablet devices to help document and inventory the personal
effects retrieved alongside recovered collateral. This common
practice helps licensees preserve an electronic copy of the
inventory for future reference and increases the accountability
of licensees.
Another issue raised by the industry is the requirement of
licensees to remove all personal effects in the recovered
collateral and store these items in a separate, secure location.
In order to further public trust in the industry and the
confidence of individuals to retrieve their personal effects,
the author asserts that licensees should be able to leave these
items in the repossessed vehicle after an inventory of these
items has been completed so that no items will be misplaced or
lost when transferred to a separate storage location. Current
law also states that licensees must keep all personal effects
for a minimum of 60 days and may dispose of these items if the
debtor does not claim them within that time. The author asserts
that many times, the debtor does not want to retrieve his or her
personal effects recovered at the time the vehicle is
repossessed. However, even though the debtor does not want to
keep these personal effects, the licensee must retain these
items for a minimum of 60 days.
AB 281
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This bill changes the requirement for licensees from having to
create a complete and accurate inventory to one of good faith
effort. The author asserts that the change in this language is
necessary because a complete and accurate inventory is not
always possible depending on the state of distress the
collateral is in when it is recovered. Oftentimes, there are
copious amounts of trash in the recovered vehicles, and items
can be buried beneath this trash. The author asserts that this
change, alongside the amendments that would allow photographic
inventory and the storing of personal effects inside the
collateral, will provide greater consumer protection and
encourage trust since items that would be hidden in the
repossessed vehicle would not need to be removed and could be
photographed inside the vehicle. This bill also allows a
licensee to dispose of any personal effects immediately after
obtaining a waiver forfeiting any personal items from the debtor
or person in possession of the collateral at the time of
repossession. The author asserts that this will allow LRAs to
dispose of unwanted items and trash the owner has no interest in
keeping immediately without having to wait the minimum 60 days.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
Estimated Bureau costs of approximately $14,000 annually to
hold four DRC hearings. (Private Security Services Fund)
Bureau 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 information
technology 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
AB 281
Page 8
costs on local agencies because towing companies and impound
lots are not generally owned or operated by local agencies.
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.
SUPPORT: (Verified8/19/15)
California Association of Licensed Repossessors (source)
OPPOSITION: (Verified8/19/15)
None received
ARGUMENTS IN SUPPORT: According to California Association of
Licensed Repossessors, "AB 281 would revise the Collateral
Recovery Act to clarify the job description of repossessors,
promote flexibility, and establish a disciplinary review
committee - a proven mechanism to save time and taxpayer
dollars?Establishing this committee will provide an opportunity
for the Bureau of Security and Investigative Services to save
money, and for quicker decisions to be made in the pending cases
of licensees."
ASSEMBLY FLOOR: 78-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Linder, Medina
AB 281
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Prepared by:Janelle Miyashiro / B., P. & E.D. / (916) 651-4104
8/19/15 20:23:21
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