BILL ANALYSIS                                                                                                                                                                                                    





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular Session


          AB 1570 (Chang)
          Version: June 8, 2016
          Hearing Date: June 28, 2016
          Fiscal: No
          Urgency: No
          TH   


                                        SUBJECT
                                           
                    Collectibles: Sale of Autographed Memorabilia

                                      DESCRIPTION  

          This bill expands existing law regulating the sale of  
          collectible sports items by dealers to include all autographed  
          items, whether or not sport related.  This bill excludes  
          individuals who sign the memorabilia, pawnbrokers who acquire  
          autographed items through foreclosure on a collateral loan, and  
          providers or operators of online marketplaces from the  
          definition of dealers, as specified.

                                      BACKGROUND  

          In the late 1990s and early 2000s, the Federal Bureau of  
          Investigation conducted several nationwide efforts to disrupt  
          crime rings that specialize in the creation and sale fraudulent  
          autographed memorabilia.  According to the FBI:

            During the 1990s, the FBI identified a major problem  
            threatening the entire sports and celebrity memorabilia  
            market.  In the mid-1990s, the Chicago Division of the FBI  
            initiated a sports memorabilia fraud investigation targeting a  
            group of individuals who forged, fraudulently authenticated,  
            and distributed Chicago athletes' autographed memorabilia  
            (including Michael Jordan).  The case resulted in the  
            conviction of fourteen individuals in five states involved  
            with forging and distributing forged memorabilia. Information  
            developed by the Chicago FBI's "Foul Ball" investigation  
            suggested that the problem might be national in scope.








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            While it is impossible to definitively estimate the percentage  
            of forged memorabilia, most industry experts concede that over  
            half of the most sought-after athletes' and celebrities'  
            autographed memorabilia is forged.  Industry experts estimate  
            that the autographed memorabilia market in the United States  
            is approximately $1 billion per year.  Cooperating subjects  
            and memorabilia experts estimate forged memorabilia comprises  
            over $100 million of the market each year.
            In 1997, the FBI in San Diego utilized information from  
            Operation Foul Ball and other sources to institute an  
            undercover operation designed to infiltrate the nationwide  
            memorabilia fraud network [known as Operation Bullpen]. . . .  
            Although Operation Bullpen has highlighted the fraud problem  
            within this industry, additional education of the public will  
            help eliminate the crime.  (FBI, Operation Bullpen Overview  
            (July 2005)  [as of June 18, 2016].)

          Since 1992, with the passage of AB 3113 (Speier, Ch. 656, Stats.  
          1992), California law has imposed significant penalties on  
          memorabilia dealers who sell counterfeit autographed sports  
          items.  Under existing law, violators are subject to civil  
          penalties equaling 10 times the actual damages incurred by  
          injured consumers, among other penalties and sanctions.  This  
          bill would expand these existing protections to encompass  
          dealers who sell any autographed memorabilia, whether sport  
          related or not.

                               CHANGES TO EXISTING LAW
           
           Existing law  , Civil Code Section 1739.7, regulates the marketing  
          and sale of autographed sports items and sports memorabilia sold  
          or offered for sale for $5 or more.

           Existing law  states that whenever a dealer, in selling or  
          offering to sell to a consumer a collectible in or from this  
          state, provides a description of that collectible as being  
          autographed, the dealer shall furnish a certificate of  
          authenticity to the consumer at the time of sale.  The  
          certificate of authenticity shall be in writing, shall be signed  
          by the dealer or his or her authorized agent, and shall specify  
          the date of sale.  The certificate of authenticity shall be in  
          at least 10-point boldface type and shall contain the dealer's  
          true legal name and street address, and the dealer must retain a  







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          copy of the certificate of authenticity for not less than seven  
          years.  Existing law describes the contents that must appear on  
          a certificate of authenticity.  (Civ. Code Sec. 1739.7(b).)

           Existing law  states that no dealer shall represent an item as a  
          collectible if it was not autographed by the sports personality  
          in his or her own hand.  (Civ. Code Sec. 1739.7(c).)

           Existing law  states that no dealer shall display or offer for  
          sale a collectible in this state unless, at the location where  
          the collectible is offered for sale and in close proximity to  
          the collectible merchandise, there is a conspicuous sign that  
          reads as follows:
          "SALE OF AUTOGRAPHED SPORTS MEMORABILIA: AS REQUIRED BY LAW, A  
          DEALER WHO SELLS TO A CONSUMER ANY SPORTS MEMORABILIA DESCRIBED  
          AS BEING AUTOGRAPHED MUST PROVIDE A WRITTEN CERTIFICATE OF  
          AUTHENTICITY AT THE TIME OF SALE. THIS DEALER MAY BE SURETY  
          BONDED OR OTHERWISE INSURED TO ENSURE THE AUTHENTICITY OF ANY  
          COLLECTIBLE SOLD BY THIS DEALER."  (Civ. Code Sec. 1739.7(d).)
           Existing law  provides that any consumer injured by the failure  
          of a dealer to provide a certificate of authenticity containing  
          the required information, or by a dealer's furnishing of a  
          certificate of authenticity that is false, shall be entitled 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, incurred by the consumer in the action.  The  
          court, in its discretion, may award additional damages based on  
          the egregiousness of the dealer's conduct.  The remedy specified  
          in this section is in addition to, and not in lieu of, any other  
          remedy that may be provided by law.  (Civ. Code Sec. 1739.7(g).)

           Existing law  provides the following definitions as they relate  
          to the sale of autographed sports items and sports memorabilia:
           "Collectible" means an autographed sports item, including, but  
            not limited to, a photograph, book, ticket, plaque, sports  
            program, trading card, item of sports equipment or clothing,  
            or other sports memorabilia sold or offered for sale in or  
            from this state by a dealer to a consumer for five dollars  
            ($5) or more; and
           "Dealer" means a person who is in the business of selling or  
            offering for sale collectibles in or from this state,  
            exclusively or nonexclusively, or a person who by his or her  
            occupation holds himself or herself out as having knowledge or  
            skill peculiar to collectibles, or to whom that knowledge or  







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            skill may be attributed by his or her employment of an agent  
            or other intermediary that by his or her occupation holds  
            himself or herself out as having that knowledge or skill.   
            "Dealer" includes an auctioneer who sells collectibles at a  
            public auction, and also includes persons who are consignors  
            or representatives or agents of auctioneers.  "Dealer"  
            includes a person engaged in a mail order, telephone order, or  
            cable television business for the sale of collectibles.  (Civ.  
            Code Sec. 1739.7(a).)

           This bill  would instead define the term "collectible" to mean  
          all autographed items, whether or not sport related, and would  
          make conforming changes to existing provisions regulating the  
          sale or offer to sell by a dealer to a consumer of a collectible  
          in this state.

           This bill  would redefine "dealer" to mean a person who is  
          principally in the business of selling or offering for sale  
          collectibles, or a person who by his or her occupation holds  
          himself or herself out as having knowledge or skill peculiar to  
          collectibles, or to whom that knowledge or skill may be  
          attributed by his or her employment of an agent or other  
          intermediary, as specified.

           This bill  would specify that "dealer" does not include any of  
          the following:
           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;
           the personality who signs the memorabilia; or
           a provider or 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 the state, exclusively or  
            nonexclusively, or does not hold itself out as having  
            knowledge or skill peculiar to collectibles.

                                        COMMENT
           
           1.Stated need for the bill 

          The author writes:

            Current law helps reduce forged autographs in the sports  







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            memorabilia market by requiring dealers to demonstrate  
            authenticity.  Any autographed sports item (including photos,  
            books, cards, clothing and equipment, 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.  However, forged collectibles are just as  
            prevalent outside of the sports market.  No law is currently  
            in place to protect the 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 [percent] of submitted items  
            for the more prominent names, including Neil Armstrong,  
            Michael Jackson, and others.  For example, experts estimate  
            that . . . 94 percent of all autographed Beatles memorabilia  
            is forged, as [is] 76 percent of Marilyn Monroe and Elvis  
            Presley collectibles. . . . 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.  AB 1570 would remove the  
            word "sports" from Civil Code Section 1739.7 in order to  
            expand the definition of memorabilia and collectibles to  
            include historical artifacts, entertainment memorabilia, and  
            other categories.  By expanding the definition of memorabilia,  
            victims of forged memorabilia are able to recover 10 times the  
            amount of actual damages as well as court and attorney fees.   
            In addition, dealers of memorabilia would be required to  
            provide certificates of authenticity upon any sale of signed  
            collectibles.  

           2.Protecting consumers from counterfeit goods  

          Existing law, the Consumer Legal Remedies Act (CLRA), generally  
          protects California consumers from merchants who sell  
          counterfeit goods in the marketplace.  The CLRA prohibits  
          specified unfair methods of competition, acts or practices by  
          any person which either results in or is intended to result in  
          the sale or lease of goods or services to a consumer.  (Civ.  
          Code Sec. 1770.)  Existing law enumerates several methods of  







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          unfair competition, acts, or practices, including passing off  
          goods or services as those of another, and misrepresenting the  
          source, sponsorship, approval, or certification of goods or  
          services.  Any consumer who suffers damage as a result of these  
          prohibited practices may bring an action to recover damages, and  
          existing law allows for a class action suit to be filed on  
          behalf of a class of consumers adversely affected by an unfair  
          method of competition, act, or practice.  (Civ. Code Secs. 1780,  
          1781.)

          This bill would build upon the remedies already offered  
          consumers under the CLRA.  AB 1570 would create an independent  
          cause of action for consumers harmed by dealers who sell  
          autographed memorabilia without truthfully certifying the  
          authenticity of the item being purchased.  Existing law already  
          provides a remedy for individuals who purchase autographed  
          sports memorabilia from dealers who do not provide the required  
          certifications.  This bill expands that existing framework to  
          cover all autographed items sold by dealers - those who hold  
          themselves out as having skill or expertise in collectables.   
          Consequently, all autographed items sold in California,  
          including signed photographs, movie posters, and potentially  
          works of art, sold by dealers would fall within the expanded  
          protections offered by this bill.


           Support  :  California Police Chiefs Association; Consumer  
          Federation of California; Genuine COA; Motion Picture  
          Association of America; Screen Actors Guild-American Federation  
          of Television and Radio Artists, AFL-CIO; One Individual

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          SB 2024 (Rainey, Ch. 494, Stats. 1998) reduced the threshold  
          sales price for an item to be considered a collectible, required  
          collectible dealers to perform additional specified consumer  
          protection tasks, increased protections relating to certificates  







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          of authenticity for collectibles, and made it a misdemeanor to  
          manufacture, produce, or sell a forged or imitation collectible.

          AB 434 (Rainey, Ch. 360, Stats. 1995) expanded existing  
          regulations of sports memorabilia to include sports items  
          bearing the actual signature of a personality and sold or  
          offered for $25 or more, require the disclosure to specify that  
          a dealer may be surety bonded or otherwise insured, and increase  
          the amount of the civil penalty to 10 times the amount of actual  
          damages.  This bill also prohibited a person from representing  
          himself or herself as a dealer without a valid resale  
          certificate, and requires a promoter to deliver a specified  
          notice to a dealer who agrees to purchase or rent space in a  
          trade show that features collectibles.

          AB 3113 (Speier, Ch. 656, Stats. 1992) required dealers making  
          sales of items represented as autographed sports items, and  
          priced over $50, in or from this state to provide a prescribed  
          certificate of authenticity. Failure to do so, or the inclusion  
          of false information in the certificate, would make the dealer  
          liable to the buyer for a civil penalty equal to three times the  
          actual damages, plus court costs and the buyer's attorney's  
          fees.  The bill also required specified disclosures in  
          advertisements for these autographed sports items and required  
          posting of a specified disclosure at locations where these items  
          are displayed or offered for sale.

           Prior Vote  :

          Senate Business, Professions and Economic Development Committee  
          (Ayes 9, Noes 0)
          Assembly Floor (Ayes 78, Noes 0)
          Assembly Privacy and Consumer Protection Committee (Ayes 11,  
          Noes 0)

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