BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1097|
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CONSENT
Bill No: AB 1097
Author: Holden (D)
Amended: 5/11/15 in Assembly
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 6/15/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE JUDICIARY COMMITTEE: 6-0, 7/7/15
AYES: Jackson, Moorlach, Hertzberg, Leno, Monning, Wieckowski
NO VOTE RECORDED: Anderson
ASSEMBLY FLOOR: 78-0, 5/14/15 (Consent) - See last page for
vote
SUBJECT: Alarm companies: electronic transactions
SOURCE: ADT Security Services
DIGEST: This bill authorizes alarm companies to distribute
contracts to customers by electronic means.
ANALYSIS:
Existing law:
1) Establishes the Alarm Company Act, which provides for the
licensure and regulation of alarm company operators and the
certification and registration of alarm company employees.
(Business and Professions Code (BPC) § 7590)
2) States that every agreement by an alarm company, including
but not limited to lease agreements, monitoring agreements,
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and service agreements, must be in writing. Additionally,
each agreement must contain:
a) The name business address, business telephone number,
and the license number of the alarm company operator or
registration number of any alarm agent who solicited or
negotiated the agreement.
b) Approximate dates when the work will begin and when it
will be completed.
c) A description of the work being done and materials
used.
d) A disclosure that the alarm company operators are
licensed by the Bureau of Security and Investigative
Services (Bureau) in the Department of Consumer Affairs.
e) A description of the alarm system and its major
components.
f) Other matters agreed to by the parties in the
contract.
g) Statement that upon completion, the alarm company will
teach the purchaser in the system's proper use.
h) Payments and payment schedules for initial residential
sales and lease agreements totaling over $250 over the
time period fixed by the agreement. (BPC § 7599.54)
1) Prohibits a licensee from making any untrue or misleading
statements in connection with the business of the licensee.
(BPC § 7599.55)
2) Mandates any licensee, qualified certificate holder,
firearms qualification card holder, or registrant to notify
the Bureau within 30 days of any change or residence or
business address. (BPC § 7599.59)
3) Provides that an electronic contract (e-contract), record,
or signature can satisfy a written contract or record.
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(Civil Code (CC) § 1633.7)
4) Defines "electronic" as relating to technology and having
electrical, digital, magnetic, wireless, optical,
electromagnetic or similar capabilities. (CC § 1633.2(e))
5) Defines "electronic record" as a record created, generated,
sent, communicated, received, or stored by electronic means.
(CC § 1633.2(g))
6) Defines "electronic signature" as an electronic sound,
symbol, or process attached to or logically associated with
an electronic record and executed or adopted by a person with
the intent to sign the electronic record. (CC § 1633.2(h))
7) Defines "home solicitation contract or offer" to mean any
contract or offer which is subject to approval for the sale,
lease, or rental of goods and/or services made at other than
appropriate trade premises in an amount of $25 or more. (CC
§ 1689.5(a))
8) Defines "appropriate trade premises" as the premises where
either the owner or seller normally carries out business or
where goods are normally offered or exposed for sale. (CC §
1689.5(b))
9) Provides that a contract may be conducted by electronic
means based on the context and surrounding circumstances of
the agreement. A party that agrees to conduct a transaction
by electronic means may refuse to conduct other transactions
by electronic means. (CC § 1633.5)
10)States that a buyer has the right to cancel a home
solicitation contract or offer until midnight of the third
business day after the day on which the buyer signs an
agreement or offer to purchase. (CC § 1689.6)
11)States that a home solicitation contract or offer must be:
written in the same language as principally used in the oral
sales presentation, dated & signed by the buyer, and contain,
in conspicuous proximity to the space reserved for the
buyer's signature, the following statement: "You, the buyer,
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may cancel this transaction at any time prior to midnight of
the third business day after the date of this transaction.
See the attached notice of cancellation form for an
explanation of this right." (CC § 1689.7)
12)Excludes certain transactions from being conducted
electronically, including the creation and execution of
wills, codicils, health care powers of attorney, or
testamentary trusts. (CC § 1633.3)
This bill:
1)Authorizes alarm company salespersons to use e-contracts for
service in lieu of paper contracts at the discretion of the
customer.
2)Extends the provisions of the Uniform Electronic Transactions
Act (UETA) to cover transactions conducted by persons
licensed, certified, or registered under the Alarm Company
Act.
3)Requires e-contracts for services or other activities
authorized by the Alarm Company Act to comply with specified
cancellation periods, statements, and disclosures that apply
to home solicitation contracts.
4)Authorizes any signatures, disclosures, and documents required
by these home solicitation contracts to be provided and
transmitted by electronic means.
Background
The UETA was first drafted by the National Conference of
Commissioners on Uniform State Laws in 1999 to help set
standardized state rules for creating e-contracts that would
provide the same legal obligation as traditional paper
transactions. Included in these standardized rules are specific
definitions to e-contract terms in relation to traditional
contractual agreements. The UETA defines an "electronic record"
as a contract or other type of record created, generated,
communicated, received, or stored by electronic means. An
"electronic signature" is defined by the UETA as an electronic
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sound, symbol, or process attached to or logically associated
with a contract or record and executed or adopted by a person
with the intent to sign the record.
There are certain transactions that are not covered under the
UETA. These include wills, trusts, codicils to a will, health
care powers of attorney, transactions governed by the U.C.C, the
Uniform Computer Information Transactions Act, and any state law
exempting application. When the UETA was released, states had
the option of adopting the entire UETA law or part(s) of the
proposed provisions in the act.
In 1999, California became one of the first states to adopt the
UETA, giving
e-contracts and signatures the same legal standing as
traditional paper contracts. In an effort to further protect
consumers, California additionally exempted in-home sales from
the UETA. Almost any consumer transaction $25 or more which
takes place in the buyer's home or away from other appropriate
trade premises constitute an in-home sale. Additionally, in
2010, California passed the Consumer's Rights to Cancel Home
Solicitation Contracts through the Home Solicitation Sales Act.
This Act gives consumers the ability to cancel a sale or
contract made through an in-home sale without penalty or
obligation if the consumer gives a proper notice within three
business days. With this additional UETA exemption in the use
of e-contracts and the cancellation provisions in the Home
Solicitation Sales Act, in-home sales vendors are currently
required to continue leaving a paper copy of the contract and
two copies of the notice of three-day right of recession with
the consumer at the time of the sale.
However, advancements in technology have rendered these paper
contracts including in-home sales paper contracts nearly
obsolete. Paper contracts are easily misplaced and can be
damaged over time. E-contracts offer added consumer protection
properties because they are reproducible, and metadata (data
that summarizes basic information about other data) showing when
the contract and other documents were signed, emailed, and even
opened, can be subpoenaed. Many in-home vendors use tablet
devices to help assess customer needs and discuss contract
terms, an already common practice that the author asserts will
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further reduce environmental impact. This common practice helps
salespersons preserve an electronic copy of the document for
future reference, which can be emailed to customers for their
own files, providing greater transparency into the contracting
process. The author further argues that this transparency with
the adoption of e-contracting will give the state additional
enforcement tools to ensure that the sale was a voluntary
transaction with the fulfillment of all notice requirements.
This bill authorizes alarm companies in California to distribute
e-contracts without requiring a separate paper copy to be
generated at the discretion of the customer. Consumers who
still wish to receive a paper copy of their contract will still
maintain this option.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified7/9/15)
ADT Security Services (source)
California Alarm Association
California Cable & Telecommunications Association
OPPOSITION: (Verified7/9/15)
None received
ARGUMENTS IN SUPPORT: Writing in support of the bill, ADT
Security Services, the sponsor, states, "We believe it is time
to update California statute to allow companies in the state to
fully utilize e-contracts and to electronically send (email) the
required contract and notice of rescission documents to the
customer, without requiring that wasteful paper copies also be
generated and left behind. Of course, electronic contracting is
voluntary, and consumers must first consent."
The California Alarm Association writes, "Electronic contracts
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provide better verification on whom and when a contract was
signed, as well as when the contract and notice of cancelation
are received. A date and time stamp appears on emails,
verifying when they are sent. It is also possible to see when
the customer has logged into the e-contract system. AB 1097
would still allow the customer to receive a paper contract.
However, as mentioned above, an electronic contract allowed
under this bill will provide additional consumer protections."
The California Cable & Telecommunications Association writes,
"The adoption of this proposal would result in greater
convenience for alarm service customers by providing an
immediate electronic contract access to consumers, providing for
greater consumer protections and verification of customer
authorization, and confirming that customers understand and
review their right to cancel service."
ASSEMBLY FLOOR: 78-0, 5/14/15
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
7/10/15 14:08:06
**** END ****
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