BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2106| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 2106 Author: Irwin (D) Amended: 6/9/16 in Senate Vote: 21 SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 6/6/16 AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Mendoza, Wieckowski NO VOTE RECORDED: Jackson SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 78-0, 5/12/16 (Consent) - See last page for vote SUBJECT: Sellers of travel: registration SOURCE: California Coalition of Travel Organizations DIGEST: This bill makes various changes to the Sellers of Travel Law. ANALYSIS: Existing law: 1) Establishes the Sellers of Travel Law (Law), which provides a comprehensive scheme for the regulation of sellers of travel (SOT) and requires a SOT, unless exempted, to register with the Attorney General (AG) and to comply with various requirements. (Business and Professions Code (BPC) § 17550 AB 2106 Page 2 et. seq.) 2) Requires, when registering with the AG, a SOT file certain information, including the name and contact information of individuals a SOT contracts with. Requires the AG to suspend a SOT's registration for failure to make payment to the Travel Consumer Restitution Fund (TCRF) or writes a registration fee check that is not honored. Authorizes the AG to contract for the processing of SOT registrations. Exempts individuals that conduct their activities in accordance with specified procedures and disclosures. (BPC §§ 17550.20, 17550.21) 3) Establishes the Travel Consumer Restitution Corporation (TCRC) which creates the TCRF as a mechanism for an aggrieved passenger to be reimbursed when a SOT fails to provide for travel or in the event that a SOT becomes insolvent. (BPC § 17550.38) This bill: 1) Specifies that a registration shall not be issued, renewed, or approved until outstanding TCRF assessments are paid. 2) Requires a SOT to provide the seven-digit California corporation number assigned by the Secretary of State (SOS) or the Franchise Tax Board to the AG and specifies that failure to provide this information is grounds for registration suspension. Requires a SOT to also provide the AG the name and contact information for individuals in a single-member limited liability corporation or "S" corporation who the SOT contracts with. 3) Prohibits the issuance, approval, or renewal of registration until the seller of travel has paid any outstanding assessments due to the TCRC. AB 2106 Page 3 4) Exempts single-member limited liability corporations and "S" corporations whose member is a natural person that conduct their activities in accordance with specified procedures and disclosures from registration. 5) Allows refund payments to persons aggrieved by SOTs who had been paid-up participants at any time during the 18 months previous to the time of sale. 6) Declares that any person aggrieved who files a claim for payment from the TCRF would waive his or her right to bring an action at law or equity against the SOT as to that claim unless the SOT had not been a paid-up participant in the TCRF at any time during the 18 months previous to the time of sale. Background The Law was enacted by AB 918 (Chapter 1123, Statutes of 1994), authored by then-Assemblymember Jackie Speier and sponsored by the source of this bill, working in cooperation with the AG's office. The Law requires all SOTs to register with the AG's office, pay an annual fee of $100 to fund the program and pay annual assessments into a self-sustaining restitution fund (the TCRF). The Law provides specific protections to consumers who purchase sea or air transportation either singly or in conjunction with other travel services, such as lodging and car rentals. The Law applies to all sellers located in California, as well as those who sell or offer to sell from locations outside the state to persons located in California and applies to both retail and wholesale transactions, covering sales by tour operators, consolidators, and wholesalers. A seller who only offers lodging, bus, or train tours without also offering air or sea transportation is not covered by the Law. Lodging establishments that book travel for their guests and accept no money for doing so, along with airlines, and cruise lines are also not covered by this law. AB 2106 Page 4 The Law also provides for a number of guarantees. In the event that there is a cancellation, the purchaser is entitled to receive a prompt and automatic refund. If there is a material misrepresentation by the seller, the Law likewise requires a refund. Finally, the Law provides that once the seller has received the purchaser's full payment, the purchased tickets must be promptly delivered. According to the author, the goals of this bill are to ensure that SOTs comply with the requirements under current law that they obtain a California State Tax Identification number issued by the SOS; to ensure that a consumer's ability to recover from the TCRF does not depend on whether the SOT was late in paying its assessment to the TCRF by allowing consumers to recover from the fund for up to 18 months and; to ensure that independent agents may be a business entity and do not have to be a natural person, reflecting the common practice of independent agents to organize as a single member limited liability corporation or S-corporation. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No SUPPORT: (Verified6/29/16) California Coalition of Travel Organizations (source) OPPOSITION: (Verified6/29/16) None received ARGUMENTS IN SUPPORT: The California Coalition of Travel Organizations thinks that this bill is important to update current law in order to enhance the consumer protections and the efficiency of the Law. AB 2106 Page 5 ASSEMBLY FLOOR: 78-0, 5/12/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, 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, Williams, Wood, Rendon NO VOTE RECORDED: Burke, Jones-Sawyer Prepared by:Sarah Mason / B., P. & E.D. / (916) 651-4104 7/29/16 12:25:36 **** END ****