BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 605 Hearing Date: 6/23/2015
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|Author: |Gatto |
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|Version: |6/16/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Dealer charges: license plates.
DIGEST: This bill limits the charges that can be included in
the electronic filing fee paid by automobile purchasers.
ANALYSIS:
The Department of Motor Vehicles' (DMV) electronic vehicle
registration (EVR) program has outsourced some of the vehicle
licensing and titling functions to willing motor vehicle
dealers. Known as "business partners," these dealers
communicate electronically with the DMV to register the vehicles
and then mail the license plates, registration cards, and tags
to the buyer. The dealers often utilize third parties, known as
first-line service providers, for this processing. This
outsourcing was intended to save DMV costs by shifting them to
dealers. Existing law allows dealers to pass along these costs
to customers as a separate charge, herein called an electronic
filing charge. DMV regulations currently limit the charge to
$29, of which $4 is for DMV fees and $25 is for the first-line
service processors. This charge was last examined in 2006.
The intent of the bill is to prohibit the first-line service
providers from charging an electronic filing fee that is more
than their costs plus a reasonable profit.
COMMENTS:
Purpose of bill. The author is concerned that some first-line
AB 605 (Gatto) Page 2 of ?
service providers are overcharging for their EVR services, using
the extra profits to subsidize other services provided to the
dealers. To prevent overcharging, this bill specifies that the
electronic filing fee cannot be used to pay for any additional
fees, goods, or services not directly related to the electronic
registration of a motor vehicle.
A little bit of regulation. Preventing overcharging will
require the DMV to audit and investigate the books and records
of the first-line service providers. This is not a difficult
task, but it can be costly and is often adversarial. Government
agencies do this all the time; the California Public Utilities
Commission does this routinely when setting rates for electric,
natural gas, and water service. The DMV has a substantial
auditing department which should have the expertise to perform
this function.
Opposition concerns. Opponents are concerned that the bill will
subject them to regulation, the extent of which is unclear.
They believe that it is almost impossible to regulate prices and
that the effort will be fruitless, as all costs are passed on to
customers in any event.
Cost/benefit. It is fair to ask the question of whether the
expense of creating this regulatory structure is outweighed by
the benefits of potentially lower prices. While rooting out
overcharging is always a worthy goal, even if the DMV found that
prices were too high by 20%, the savings to car buyers would be
$5.
Another way? An alternative to the relatively expensive process
of auditing and investigating the books of each of the providers
is for regulators to simply establish a reasonable price cap
applicable to any provider, as seems to be the current practice.
There appears to be some belief that the current $29 price may
be too high. Having the DMV reexamine that price would be
quicker and less costly.
Not my customer. The customers of the first-line service
providers are the dealers, not the car buyer. The dealers
aren't necessarily looking for the lowest price from the
first-line service providers, as those costs are passed along
entirely to car buyers, who have no choice in the matter.
Assembly Votes:
AB 605 (Gatto) Page 3 of ?
Floor: 80-0
Appr: 17-0
Trans: 16-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: Yes
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 17, 2015.)
SUPPORT:
Motor Vehicle Software Corporation
TechNet
Bob Blumenfield, Los Angeles Councilmember
OPPOSITION:
Computerized Vehicle Registration
Dealertrack Technologies, Inc.
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