BILL ANALYSIS Ó
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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