BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 605 (Gatto) - Dealer charges: license plates
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|Version: June 16, 2015 |Policy Vote: T. & H. 9 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: July 6, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: AB 605 would prohibit electronic vehicle registration
filing charges from being used to pay for additional fees,
goods, or services not directly related to electronic
registration.
Fiscal
Impact: Minor and absorbable costs to the Department of Motor
Vehicles (DMV) for enforcement activities related to improper
electronic filing charges. (Motor Vehicle Account)
Any costs related to DMV investigations and audits are fully
recoverable (see below).
AB 605 (Gatto) Page 1 of
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Background: In 2001, SB 46 (Polanco), Ch. 127/2001, established a
voluntary electronic vehicle registration (EVR) program in which
motor vehicle dealers may enter into contracts to act as DMV
business partners for vehicle registration and titling purposes.
A business partner, either directly or through a service
provider, communicates electronically with DMV to register a
vehicle and then mail license plates, registration cards, and
registration stickers to the buyer or lessee.
Existing law, pursuant to AB 1215 (Blumenfield), Ch. 329/2011,
requires all new car dealers to participate in the EVR program
and authorizes a dealer to charge a vehicle purchaser or lessee
an electronic filing charge, not to exceed the actual amount the
dealer is charged by a first-line service provider for providing
license plate processing, postage, and fees for processing and
payment programs for vehicle registration and titling
transactions. Existing law authorizes the director of DMV to
adopt regulations establishing the maximum amount that a
business partner (either a dealer or a first-line service
provider) may charge for EVR services.
DMV regulations establish an EVR transaction fee of $29 that may
be charged to a vehicle purchaser or lessee, $4 of which is a
DMV transaction fee deposited into the Motor Vehicle Account.
Existing regulations authorize DMV to exercise all available
enforcement authority and powers related to the EVR program,
including examining, auditing and investigating a business
partner's books and records, and charging and collecting the
reasonable costs for these activities.
Proposed Law:
AB 605 would prohibit the electronic filing charge from being
used to pay for additional fees, goods, or services not directly
related to electronic vehicle registration, including the
receipt by the dealer of free or discounted goods, services, or
financial incentives. The bill would not prohibit a first-line
service provider from entering into contracts with dealers for
products and services unrelated to electronic vehicle
registration services.
AB 605 (Gatto) Page 2 of
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Related
Legislation: AB 2324 (Gatto), introduced in 2012, would have
placed a $22 per transaction cap on the amount than an EVR
service provider can charge a dealer, and authorized DMV to
increase the cap through regulations. Testimony was taken on
that bill in the Senate Transportation and Housing Committee,
but the Committee did not take further action.
Staff
Comments: The intent of this bill is to curtail the practice of
using the electronic filing charge as a point of negotiation
between dealers and first-line service providers who may offer
discounts on other vehicle industry related services as a part
of an EVR agreement. The author contends that the electronic
filing charge should not be used to subsidize other services
unrelated to the provision of electronic registration and
titling transactions.
Existing law authorizes DMV to contract with qualified private
business partners for processing and payment programs for
vehicle registration and titling transactions, and to establish
fees that business partners may charge for EVR services.
Vehicle dealers contract with first-line service providers to
manage EVR transactions with DMV and pass through the
transaction fees to vehicle purchasers and lessees. DMV has
broad enforcement authority to ensure that first-line service
providers' electronic filing charges are based upon the actual
costs of providing EVR services. To the extent this bill
requires DMV to scrutinize transaction costs and charges, any
enforcement and auditing costs can be recovered from the
entities subject to enforcement. DMV has authority in current
law to reduce the transaction fee, if the department determines
that the maximum fee exceeds the costs for providing EVR
services.
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