BILL ANALYSIS Ó SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT Senator Jerry Hill, Chair 2015 - 2016 Regular Bill No: AB 1570 Hearing Date: June 13, 2016 ----------------------------------------------------------------- |Author: |Chang | |----------+------------------------------------------------------| |Version: |June 8, 2016 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Mendoza | |: | | ----------------------------------------------------------------- Subject: Collectibles: sale of autographed memorabilia SUMMARY: Requires dealers, as specified, 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. 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) § 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 (Chang) Page 2 of ? 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 certificate number from the State Board of Equalization; AB 1570 (Chang) Page 3 of ? 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 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 AB 1570 (Chang) Page 4 of ? 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)) This bill: 1) Expands existing consumer protections and requirements pertaining to the trade in autographed sports collectibles, AB 1570 (Chang) Page 5 of ? 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) Revises the definition of "dealer" to any person who is principally in the business of selling or offering for sale collectibles in or from this state. 4) Expands the definition of a "dealer" to include a person engaged in an online business for the sale of collectibles. 5) Excludes from the definition of a "dealer" a licensed pawnbroker if the collectible was acquired through a foreclosure on a collateral loan, provided that the pawnbroker does not hold himself or herself out as having knowledge or skill peculiar to collectibles. 6) Excludes from the definition of a "dealer" the personality who signs the memorabilia. 7) Excludes from the definition of "dealer" an operator of an online marketplace provided that the online marketplace provider or operator is not principally in the business of selling or offering for sale collectibles in or from this state, exclusively or nonexclusively, or does not hold itself out as having knowledge or skill peculiar to collectibles. 8) Expands the definition of "description" to include representations on an Internet webpage or in an email, or a AB 1570 (Chang) Page 6 of ? representation in an online communication to the public in or from California. 9) Makes other technical or clarifying amendments. FISCAL EFFECT: None. This bill is not keyed "fiscal" by Legislative Counsel. COMMENTS: 1. Purpose. The Author is the sponsor of this bill. 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." 2. Background. 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 uncovering millions in forged sports, entertainment and historical AB 1570 (Chang) Page 7 of ? 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." 3. Arguments in Support. The Consumer Federation of California asserts that "forged 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." The Motion Picture Association of America, Inc. underscores that "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." The California Police Chiefs Association writes that "unfortunately no law is currently in place to protect the consumers from music, movie, historical, or other non-sport related forgeries, despites 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." NOTE : Double-referral to the Senate Committee on Judiciary. SUPPORT AND OPPOSITION: Support: AB 1570 (Chang) Page 8 of ? California Police Chiefs Association Consumer Federation of California Genuine COA Mark Hamill, Actor Motion Picture Association of America, Inc. The Screen Actors Guild-American Federation of Television and Radio Artists, AFL-CIO Opposition: None on file as of June 7, 2016. -- END --