BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 281|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 281
Author: Gallagher (R)
Amended: 9/4/15 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.
Senate Floor Amendments of 9/4/15 make various technical and
clarifying changes.
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)
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 an LRA 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
AB 281
Page 3
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 every 60 days or more or less
and authorizes members of the DRC to be paid per diem and
reimbursed for actual travel expenses.
e) Adds an operative date of July 1, 2017, to all DRC
provisions.
2) Prohibits a licensed repossessor from performing or charging
for repair work, cleaning, or detailing of any collateral
recovered.
3) Updates the method repossessors use to locate collateral by
removing the reference to "skip trace" and replacing the term
with "look for".
4) Defines the term "repossession" to mean recovering
collateral by means of an assignment by the legal owner,
lien-holder, lessor, lessee or registered owner.
5) 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.
6) Requires a repossession agency to make a complete and
accurate inventory of any personal effects of value.
7) 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.
8) 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.
AB 281
Page 4
9) 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.
10)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.
11)Makes various technical and clarifying changes.
Background
Collateral recovery. 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.
There are concerns that 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.
In order to further public trust in the industry and the
AB 281
Page 5
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.
This bill changes the requirement for licensees from having to
create a complete and accurate inventory to one of good faith
effort. 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.
DRCs. In the Bureau's March sunset report, it noted, "To
maximize the efficiency of its disciplinary activities, the
Bureau ensures that those licensees eligible to have their
appeals heard by an established DRC are properly notified of
this option in a timely manner. Each year, approximately 900
Bureau licensees request an appeal of their denials,
suspensions, or imposition of fines through DRCs."
Currently, there are two established DRCs in the Private
Security Act and one DRC established in the Alarm Company Act.
This bill will establish a DRC in the Collateral Recovery Act.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
Estimated Bureau costs of approximately $14,000 annually to
AB 281
Page 6
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 this 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.
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: (Verified9/4/15)
California Association of Licensed Repossessors (source)
OPPOSITION: (Verified9/4/15)
None received
ARGUMENTS IN SUPPORT: Supporters believe that provisions in this
bill will clarify the job description of repossessors, promote
flexibility and state that establishing the DRC will provide an
opportunity for the Bureau to save money, and make quicker
decisions related to licensees' pending cases.
ASSEMBLY FLOOR: 78-0, 5/14/15
AB 281
Page 7
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
Prepared by:Janelle Miyashiro / B., P. & E.D. / (916) 651-4104
9/8/15 14:38:31
**** END ****