BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1751| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1751 Author: Low (D), et al. Amended: 8/15/16 in Senate Vote: 27 - Urgency SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/27/16 AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 6-1, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza NOES: Nielsen ASSEMBLY FLOOR: 77-0, 6/2/16 - See last page for vote SUBJECT: Secondhand goods SOURCE: California Pawnbrokers Association DIGEST: This bill makes several changes to the operation of the California Automated Pawn and Secondhand Dealer System (CAPSS) operated by the Department of Justice (DOJ). ANALYSIS: Existing law: 1) Provides for the Secondhand Goods Law that regulates the sale or other disposition of secondhand goods. (Business and Professions Code (BPC) § 21500 et seq.) AB 1751 Page 2 2) Defines a "secondhand dealer" to mean and include any person, co-partnership, firm or corporation whose business includes buying, selling, trading, taking in pawn, accepting for sale on consignment, accepting for auctioning, or auctioning secondhand tangible personal property, but does not include a coin dealer or participants at guns shows or events, as specified. (BPC § 21626(a)) 3) Defines "tangible personal property" as all secondhand tangible personal property which bears a serial number or personalized initials or inscription or which, at the time it is acquired by the secondhand dealer, bears evidence of having had a serial number or personalized initials or inscription. (BPC § 21627(a)) 4) Defines "tangible personal property", among other things, as all tangible personal property, new or used, received in pledge as a security for a loan by a pawnbroker. (BPC § 21627(b)(1)) 5) Defines "tangible personal property" to also mean all tangible personal property that the Attorney General (AG) statistically determines through the most recent DOJ "Crime in California" report to constitute a significant class of stolen goods and requires the DOJ to supply a list of such personal property to all local law enforcement agencies, post it on the AG's Web site, and update it annually beginning January 1, 2016. (BPC § 21627(c)). 6) Defines a "significant class of stolen goods" to mean those items determined through the DOJ's annual "Crime in California" report to constitute more than 10% of property reported stolen in the calendar year preceding the annual posting of the list of significant classes of stolen goods. (BPC § 21627(e)) 7) Requires every secondhand dealer or coin dealer, as specified, to report daily or on the first working day after receipt or purchase of secondhand tangible personal property, on forms or through an electronic reporting system approved by the DOJ, all secondhand tangible personal property, except for firearms, which he or she has taken in trade or pawn, AB 1751 Page 3 accepted for sale on consignment, or accepted for auctioning to the chief of police or the sheriff as specified. (BPC § 21628) 8) Requires the DOJ, in consultation with appropriate law enforcement agencies, to develop clear and comprehensive descriptive categories denoting tangible personal property, as specified, subject to reporting requirements. (BPC § 21628(d)(1)) 9) Defines an "item" to mean any single article; however, with respect to a commonly accepted grouping of articles that are purchased as a set, including, but not limited to, a pair of earrings, or place settings of china, silverware, or other table ware, "item" refers to the commonly accepted grouping. (BPC § 21628(d)(5)) This bill: 1) States that it is the intent of the Legislature to clarify that pawnbrokers and other secondhand dealers are to report their acquisition of tangible personal property in descriptive, plain text language commonly used in the pawn and secondhand industries. 2) Defines "CAPSS" to mean "the California Pawnbroker and Secondhand Dealer System, which is a single, statewide, uniform electronic reporting system that receives secondhand dealer reports and is operated by the DOJ consistent with SCR 63 (Yee, Resolution Chapter 16, Statutes of 2010). The maintenance and operation of CAPSS is funded by the Secondhand Dealer and Pawnbroker Fund." Replaces references to "single, statewide and uniform electronic reporting system" with "CAPSS". 3) Revises the reporting requirements to require every secondhand dealer or coin dealer, as specified, to report daily or no later than the next business day, excluding weekends and holidays, after receipt or purchase of secondhand tangible personal property, to CAPSS, all secondhand tangible personal property, except for firearms, which he or she has purchased, taken in trade, taken in pawn, AB 1751 Page 4 accepted for sale on consignment, or accepted for auctioning. 4) Revises the property description requirement to be a complete and reasonably accurate description of the property. 5) Specifies that a report submitted by a pawnbroker or secondhand dealer is deemed to have been accepted by the DOJ if a good faith effort has been made to supply all of the required information. Specifies that an error or omission on the report be noted, the pawnbroker or secondhand dealer be notified of the error by the DOJ, and the reporting pawnbroker or secondhand dealer has three business days from the notice by the DOJ to amend or correct the report before being subject to any enforcement violation. 6) Requires a secondhand dealer to report any business conducted at a gun show to the CAPSS system, as specified. 7) Prohibits the DOJ, chiefs of police, and sheriffs from collecting any additional information concerning the seller, the pledger, or the property received by the secondhand dealer in the report required by statute. 8) States that if there is a future change to the reporting requirement of CAPSS that substantively alters the reporting standards, as specified, those changes must be implemented and operated in compliance with the Administrative Procedures Act and in implementing and operating a future change to CAPSS, the DOJ chiefs of police and sheriffs must comply with current reporting and holding requirements, as specified. 9) Requires a secondhand dealer or coin dealer to electronically transmit to CAPSS, no later than the next AB 1751 Page 5 business day, on the date of the transaction, excluding weekends or holidays or, if not possible due to an electrical, telecommunications, or other malfunction, as soon as reasonable thereafter, the report of acquisition of tangible personal property. 10)Deletes the provisions related to reporting on paper forms, as specified. 11)Deletes current requirements pertaining to the development and implementation of the CAPSS, as specified. 12)States that this bill is an urgency statute necessary in order to protect the public from dissemination of stolen property, make the CAPPS system a cost savings for secondhand dealers and pawnbrokers, and to require the plain text property descriptions historically utilized by these industries to be accepted by the DOJ, just as these plain text descriptions have historically been accepted by chiefs of police and sheriffs, at the earliest possible time, it is necessary that this act take effect immediately. Background According to the author, "the need for this legislation arises because in implementing the [California Automated Pawn and Secondhand Dealer System (CAPSS)] system, the DOJ is requiring second hand dealers to input optional information beyond what is statutorily authorized by the Legislature. [This bill] will continue the requirement of existing law by specifying that the plain text property descriptions commonly recognized and utilized by the pawn and secondhand dealer industries shall be the sole method of describing property acquired by these businesses. [This bill] also makes it clear that the CAPSS system does not expand beyond current law the information that is required to be collected or reported by secondhand dealers and pawnbrokers." According to information provided by the California Pawnbrokers AB 1751 Page 6 Association, there are thousands of different items that are pawned or bought daily in California by approximately 600 California pawnbrokers. Further, the daily transactions for pawnbrokers vary from shop to shop with a low of 10 to a high of 600, with the average around 50. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, this bill will incur unknown potential information technology costs and ongoing potential staff costs to classify items reported to CAPSS based on the plain text descriptions submitted by users. SUPPORT: (Verified8/11/16) California Pawnbrokers Association (source) Capital City Loan & Jewelry, II Empire Jewelry and Loan Granter Jewelry and Loan Company LLC Jewelry-N-Loan Precious Metal Investments Royal Loan San Francisco Gold Buyer The Pawnshop Inc. OPPOSITION: (Verified8/11/16) California Peace Officers' Association California Police Chiefs Association California State Sheriffs' Association ARGUMENTS IN SUPPORT: Supporters underscore that "this bill will help ensure that we are able to provide our electronic JUS123 form data directly to law enforcement via the DOJ's AB 1751 Page 7 database as mandated and agreed upon with AB 391. As you are aware, despite our efforts, the system currently in place is inadequate for law enforcement and unusable for pawnbrokers in many respects. AB 1751 addresses these points directly and will allow for an operable system to be put in place for the benefit of all." ARGUMENTS IN OPPOSITION: Opponents assert that "abandoning the requirement that the person who is in possession of the item (the pawnbroker) describe the item in favor of requiring DOJ to interpret a free-form, plain text description without the benefit of seeing or holding the item will lead to a database that contains less-than-accurate information and will severely limit the utility of this important crime-fighting tool." ASSEMBLY FLOOR: 77-0, 6/2/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Wood, Rendon NO VOTE RECORDED: Frazier, Beth Gaines, Williams Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104 8/15/16 20:33:23 **** END ****