BILL ANALYSIS Ó AB 675 Page 1 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. AB 675 Page 2 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 AB 675 Page 3 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 AB 675 Page 4 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) AB 675 Page 5 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 AB 675 Page 6 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 AB 675 Page 7