BILL ANALYSIS Ó AB 1570 Page 1 Date of Hearing: May 3, 2016 ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION Ed Chau, Chair AB 1570 (Chang) - As Amended April 25, 2016 SUBJECT: Collectibles: sale of autographed memorabilia SUMMARY: Requires dealers who advertise and sell any type of autographed collectible to provide a certificate of authenticity to the purchaser, and generally expands a variety of consumer protections that currently only apply to autographed sports memorabilia to cover all such collectibles. Specifically, this bill: 1)Generally expands existing consumer protections and requirements pertaining to the trade in autographed sports collectibles, including specified requirements for a certificate of authenticity and dealer disclosures, by deleting the reference to "sports", thereby making the existing provisions apply to all autographed collectibles. 2)Expands the definition of a "collectible" to mean any autographed item sold or offered for sale in or from this state by a dealer to a consumer for five dollars ($5) or more. 3)Expands the definition of a "dealer" to include a person engaged in an online business for the sale of collectibles. AB 1570 Page 2 4)Excludes from the definition of a "dealer" a licensed pawnbroker if the collectible was acquired through a foreclosure on a collateral loan, the personality who signs the memorabilia, and a provider of an online marketplace platform. 5)Expands the definition of "description" to include representations on an Internet webpage or in an email, or a representation in an online communication to the public in or from California. 6)Makes other technical or clarifying amendments. EXISTING LAW: 1)Regulates the sale or offer to sell by a dealer to a consumer of a sports collectible in or from this state. (Civil Code (CC) Section 1739.7) 2)Requires a dealer, in selling or offering to sell to a consumer an autographed sports collectible in or from this state, to furnish a certificate of authenticity to the consumer at the time of sale. The certificate of authenticity must be in writing, be signed by the dealer or his or her authorized agent, specify the date of sale, be in at least 10-point boldface type and contain the dealer's true legal name and street address. The dealer must retain a copy of the certificate of authenticity for at least seven years. (CC 1739.7(b)) AB 1570 Page 3 3)Requires each certificate of authenticity to do all of the following: a) Describe the collectible and specify the name of the sports personality who autographed it; b) Either specify the purchase price and date of sale or be accompanied by a separate invoice setting forth that information; c) Contain an express warranty, which shall be conclusively presumed to be part of the bargain, of the authenticity of the collectible, as specified; d) Specify whether the collectible is offered as one of a limited edition and, if so, specify how the collectible and edition are numbered; and the size of the edition and the size of any prior or anticipated future edition, as specified; e) Indicate whether the dealer is surety bonded or is otherwise insured to protect the consumer against errors and omissions of the dealer and, if bonded or insured, provide proof thereof; f) Indicate the last four digits of the dealer's resale AB 1570 Page 4 certificate number from the State Board of Equalization; g) Indicate whether the item was autographed in the presence of the dealer and specify the date and location of, and the name of a witness to, the autograph signing; h) Indicate whether the item was obtained or purchased from a third party, and the name and address of this third party, if applicable; and i) Include an identifying serial number that corresponds to an identifying number printed on the collectible item, if any, which shall also be printed on the sales receipt. (CC 1739.7(b)) 1)Prohibits a dealer from representing an item as a collectible if it was not autographed by the sports personality in his or her own hand. (CC 1739.7(c)) 2)Prohibits a dealer from displaying or offering for sale a collectible in this state unless he or she displays a conspicuous sign at the location where the collectible is offered for sale and in close proximity to the collectible merchandise, as specified. (CC 1739.7(d)) 3)Requires any dealer engaged in a mail-order or telephone-order business for the sale of collectibles in or from this state to AB 1570 Page 5 make specified disclosures in any written, radio or televised advertisement. (CC 1739.7(e)) 4)Prohibits a dealer from displaying or offering for sale a collectible in this state at any trade show or similar event primarily featuring sales of collectibles or other sports memorabilia that offers onsite admission ticket sales unless, at each onsite location where admission tickets are sold, there is prominently displayed a specimen example of a certificate of authenticity. (CC 1739.7(f)) 5)Entitles any consumer injured by the failure of a dealer to provide a valid certificate to recover, in addition to actual damages, a civil penalty in an amount equal to 10 times actual damages, plus court costs, reasonable attorney's fees, interest, and expert witness fees, if applicable, plus additional damages based on the egregiousness of the dealer's conduct. (CC 1739.7(g)) 6)Prohibits a person from representing himself or herself as a dealer in this state unless he or she possesses a valid resale certificate number from the State Board of Equalization. (CC 1739.7(h)) 7)Requires a promoter arranging or organizing a trade show featuring collectibles and autograph signings to notify in writing any dealer who has agreed to purchase or rent space in this trade show as to their legal responsibilities, as specified. ((CC 1739.7(j)) FISCAL EFFECT: None. This bill has been keyed nonfiscal by the Legislative Counsel. AB 1570 Page 6 COMMENTS: 1)Purpose of this bill . This bill is intended to protect the purchasers and collectors of all types of autographed memorabilia by expanding the existing protections for sports memorabilia, including consumer disclosures and remedies, to all types of collectibles. This bill is author-sponsored. 2)Author' statement . According to the author, "Current law has strong consumer protections in place for signed sports memorabilia, however forged collectibles are just as prevalent outside of the sports market. No law is currently in place to protect consumers from music, movie, historical, or other non-sport related forgeries. Professional authenticators evaluate hundreds of thousands of autographs annually worldwide, and often determine the signatures to be forged. According to industry experts, the rejection rate can reach over 50% of submitted items for the more prominent names, including Neil Armstrong, Michael Jackson, and others. "Fake autographs can be difficult for anyone to identify without professional validation, let alone children who are often the victims of fake signed memorabilia. Because it is so easy to fabricate a signature, authentication requirements are needed across all genres of collectibles to ensure consumers have ample protections - including civil recourse if they are sold fake items." 3)The market for forged collectibles . According to the author, there is widespread fraud in the market for autographed collectibles "Experts estimate that?94 percent of all autographed Beatles memorabilia is forged, as are 76 percent of Marilyn Monroe and Elvis Presley collectibles. In the last twenty years, the FBI instituted two major investigations AB 1570 Page 7 uncovering millions in forged sports, entertainment and historical autographed memorabilia - both cases involved operations in California. During the most recent investigation, the FBI estimated forged memorabilia 'comprises between $500,000,000 and $900,000,000' of the overall market. "As recently as 2015, the widow of The Jimi Hendrix Experience drummer Mitch Mitchell warned that many items sold online that purported to have been signed by Jimi Hendrix were really fake. While Star Wars icon Mark Hamill took to Twitter to tell fans which of their signed collectibles were forged and which were genuine." 4)Existing protections for sports collectibles . Under existing law, dealers in signed sports memorabilia must furnish a certificate of authenticity to the consumer at time of sale. The certificate provides the consumer with information about the collectible and the dealer, as well as an express warranty. Dealers must also display at the sale site and in advertisements a disclosure regarding the rights of the consumer. A consumer injured by an omitted or false certificate may seek actual damages, a civil penalty in an amount equal to 10 times actual damages, plus court costs, reasonable attorney's fees, interest, expert witness fees, and additional damages for egregious conduct, incurred by the consumer in the action. Dealers must have a valid resale certificate number from the State Board of Equalization and be surety bonded or insured. This bill would expand the same protections to all forms of signed collectibles, and also clarify that these protections apply to collectibles offered for sale online. 5)Arguments in support . According to the California Police Chiefs Association, "Current law helps reduce forged autographs in the sports memorabilia market by requiring dealers to demonstrate authenticity. Any autographed sports item (including photos, books, cards, clothing and equipment, AB 1570 Page 8 etc.) sold by a dealer must be accompanied by a certificate of authenticity, and the dealer must display signage informing the public of authentication laws." "Unfortunately, no law is currently in place to protect the consumers from music, movie, historical, or other non-sport related forgeries, despite these forged collectibles being just as prevalent. AB 1570 closes this loophole and will reduce the number of victims of forgery by strengthening the safeguards for non-sports memorabilia enthusiasts." According to actor Mark Hamill, "Standardized authentication requirements are needed across all genres of collectibles - not just sports related - to ensure all memorabilia sold is authentic. AB 1570 strengthens the safeguards for non-sports memorabilia enthusiasts by affording them the same civil recourse granted to purchasers of sports memorabilia. Anything we can do to ensure forged autographs are removed from the market will increase consumer confidence in this particular industry." The Motion Picture Association of America (MPAA) states, "This bill is consistent with MPAA and member company efforts to protect motion pictures and television from theft and to ensure the integrity of these high value productions for the benefit of viewers and consumers." Consumer Federation of California writes, "[f]orged autographs are estimated to account for $100 million of the approximately $1 billion per year autographed memorabilia market in the United States. Signatures are comparatively easy to fake and consumers are often defrauded by bad actors. Current law already protects consumers in the case of sports memorabilia; the autographs of famous non-athlete historical figures are no different and consumers deserve the same protections for those purchases." AB 1570 Page 9 REGISTERED SUPPORT / OPPOSITION: Support California Police Chiefs Association Consumer Federation of California Genuine Certificate of Authenticity Mark Hamill, Actor Motion Picture Association of America, Inc. Screen Actors Guild-American Federation of Television and Radio Artists, AFL-CIO Opposition None on file. Analysis Prepared by:Hank Dempsey / P. & C.P. / (916) 319-2200 AB 1570 Page 10