BILL ANALYSIS                                                                                                                                                                                                    



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          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.









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          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))









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          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  








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               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  








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            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. 








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          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  








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            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,  








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            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."








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          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









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