BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING


          AB  
          675 (Alejo)


          As Amended  April 15, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                 |Noes                 |
          |                |      |                     |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Judiciary       |10-0  |Mark Stone, Wagner,  |                     |
          |                |      |Alejo, Chau, Chiu,   |                     |
          |                |      |Gallagher, Cristina  |                     |
          |                |      |Garcia, Holden,      |                     |
          |                |      |Maienschein,         |                     |
          |                |      |O'Donnell            |                     |
          |                |      |                     |                     |
          |                |      |                     |                     |
           ------------------------------------------------------------------- 


          SUMMARY:  Revises the statute governing agreements between rental  
          car companies and their customers in order to achieve relatively  
          non-controversial changes.  Specifically, this bill:  


          1)Permits a rental car company, when providing a quote or imposing  
            charges, to separately state the rental rate, additional  
            mandatory charges, if any, and a mileage charge, if any, that a  
            renter must pay to hire or lease the vehicle for the period of  
            time to which the rental rate applies.








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          2)Provides, consistent with existing law, that if additional  
            mandatory charges apply, the rental company shall do the  
            following:


             a)   Provide the person receiving the quote, at the time the  
               quote is given, with a good faith estimate of the rental rate  
               and all mandatory charges, as well as the total charges for  
               the entire rental.  Specifies that if quotes and total  
               charges are provided online, then the total charges shall be  
               displayed in a typeface at least as large as any rental rate  
               and shall be obtainable by the person receiving the quote by  
               following links through no more than two Internet Web site  
               pages, including the page on which the rental rate is first  
               provided. 


             b)   Clearly and conspicuously disclose in the rental contract  
               the total of the rental rate, additional mandatory charges,  
               for the entire rental period, exclusive of charges that  
               cannot be determined at the time the rental commences.   
               Prohibits the rental car company from charging more than the  
               quoted amount unless the renter makes changes subsequent to  
               making the reservation. 


          3)Provides that if a damage waiver is offered orally at the rental  
            counter, a rental company shall orally disclose at the time of  
            the offer that the damage waiver may be duplicative of coverage  
            provided by the customer's own motor vehicle insurance policy.   
            However, if the damage waiver is obtained online, then the  
            rental car company may forgo the oral disclosure and instead  
            provide a clear and conspicuous written disclosure on the  
            company's Internet Web site, at the time the quote is given.


          4)Permits the rental car company to use information from the  








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            rental vehicle's electronic surveillance technology if the  
            rental vehicle has not been returned three days following the  
            contracted return date, or three days following the end of an  
            extension of the return date. 


          5)Eliminates a requirement that the rental car company hang on the  
            rear-view mirror of all rental vehicles a paper hanger that  
            duplicates the damage waiver information that is already  
            disclosed when offered at the counter or online.  


          6)Defines "additional mandatory charges" to mean any charges  
            imposed by a government entity that the renter must pay,  
            including, but not limited to, a customer facility charge,  
            airport concession fee, tourism commission assessment, vehicle  
            license recovery fee, or other government imposed taxes or fees.  



          7)Makes several organizational changes to account for provisions  
            that have become inoperative, to consolidate sections so as to  
            avoid redundancy, or otherwise provide a more logical structure  
            to the existing statute. 


          EXISTING LAW sets forth general rules governing contracts between  
          rental car companies and their customers on a variety of matters,  
          including, but not limited to, the manner in which rental car  
          companies advertise and quote rental charges and additional fees,  
          the renter's liability or lack thereof for damages to a rental  
          vehicle, the amount that rental car companies may charge for  
          damage waivers and the manner in which they are offered, and the  
          conditions under which a rental car company may access, obtain,  
          and use geo-location and other information from the rental  
          vehicle's electronic surveillance technology.  


          FISCAL EFFECT:  None








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          COMMENTS:  According to the author, the purpose of this bill is to  
          "modernize" Civil Code Section 1936, which regulates rental car  
          contracts.  The author believes that this measure will promote  
          transparency by clearly delineating the private charges imposed by  
          the rental car company from the many government-imposed exactions,  
          including tourism fees, airport concession and facility fees,  
          vehicle fees, and related fees and surcharges.  According to the  
          author, delineation will allow the consumer to know which parts of  
          the total charge reflect the rental company's fees, and which  
          parts represent government-imposed fees.  However, the author  
          stresses, the existing consumer protection that requires the  
          rental car company to clearly and conspicuously quote the total  
          charge will be preserved in this bill.  The author contends that  
          the other changes proposed by this bill - such as allowing  
          disclosures to be made online when a rental vehicle is reserved  
          online - "simply modernize the code."  This bill, in fact, makes  
          many changes to existing law; however, the changes are not nearly  
          as extensive as they appear at first glance.  For example, many of  
          the changes - some of which were apparently made by Legislative  
          Counsel - delete sections or subdivisions that have become  
          inoperative or redundant.  For example, part of the adjacent  
          statute, Civil Code Section 1936.01, duplicates much of Civil Code  
          Section 1936 except for some provisions that have become  
          inoperative.  Therefore, this bill deletes Civil Code Section  
          1936.01 but re-inserts the still operative parts of that statute  
          into Civil Code Section 1936.  Other changes move substantive  
          provisions that were awkwardly placed in definitional sections  
          into more appropriate substantive sections.  


          In brief, there are three substantive changes made by this bill  
          that merit attention:  1) updating a provision that allows a  
          rental car company to separate its rental fees from  
          government-imposed charges in order to reflect more recently  
          imposed charges; 2) eliminating a requirement that damage waiver  
          disclosures be made orally to reflect the fact that an increasing  
          number of people reserve rental vehicles online; and 3)  








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          notwithstanding a general prohibition on the use of information  
          obtained from the rental vehicle's GPS device, permitting the  
          company to access and use GPS information to locate the vehicle if  
          the vehicle is not returned within three days after the contracted  
          return date, shortened from the one week period in existing law. 


          Separation of Private and Public Fees.  Civil Code Section 1936  
          sets forth the general rules governing rental car contracts and  
          the respective duties and liabilities of rental car companies and  
          their customers.  One of the key issues that prompted the initial  
          legislation, and which has been the subject of several amendments  
          over the years, concerns the various taxes, assessments, and  
          surcharges typically tacked on to the rental company's fees and  
          the manner in which the company may quote those fees and charges  
          to customers.  Under existing law a rental car company must quote  
          the entire amount, with the rental fees and additional surcharges  
          "bundled" together into a single quote.  Because rental car  
          companies wanted customers to know which part of the total was  
          attributable to the rental car company and which part to  
          government-imposed fees, the statute was amended in 2007 to  
          authorize rental car companies to separate, or effectively  
          itemize, company fees from other mandatory charges.  The problem  
          with existing law, however, is that it specifically names the fees  
          and charges that existed in 2007 when the legislation was amended.  
           Since that time, several new mandatory charges have been imposed,  
          but they cannot be separately listed because they are not  
          specifically named.  This bill would address this shortcoming by  
          permitting the rental car company to separate its rental charges  
          from any "additional mandatory charges."


          Damage Waiver Disclosure.  Under existing law the rental car  
          company must disclose to the consumer that the damage waiver  
          offered by the company may be duplicative of the renter's personal  
          car insurance policy.  Since 2001, existing law has mandated that  
          this disclosure must be made orally at the counter and at the time  
          when the damage waiver is offered.  However, since 2001, the  
          method by which rental vehicles are reserved and rental agreements  








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          are entered into has changed dramatically because of the Internet,  
          with most customers reserving rental vehicles and selecting  
          options online.  This bill would acknowledge this reality by  
          allowing the disclosure to be made online if the vehicle is  
          reserved online.  If the customer reserves the vehicle or selects  
          the damage waiver option at the counter, then the disclosure must  
          still be made orally.  Relatedly, this bill would eliminate an  
          existing requirement for a paper "hanger," since it repeats the  
          disclosure and options offered online or at the counter.  


          Use of GPS Information.  California is one of a handful of states  
          that prohibit rental car companies from using information obtained  
          from the rental vehicle's GPS device to track the vehicle during  
          the rental period, except in a few narrowly defined exceptions.   
          One of the exceptions allows the rental company to access and use  
          the information if the customer fails to return the vehicle within  
          one week of the contracted return date.  The author and sponsor  
          contend, not unreasonably, that one week is a long time to wait  
          before using GPS to try to determine the whereabouts of a vehicle  
          that has not been returned, and where the renter has failed to  
          notify the rental company or sought to extend the contracted  
          return date.  This bill would reduce the period from one week to  
          three days after the contracted return date. 




          Analysis Prepared by:                                               
          Thomas Clark / JUD. / (916) 319-2334  FN: 0000168

















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