BILL ANALYSIS Ó
AB 2387
Page 1
Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION
Ed Chau, Chair
AB 2387
(Mullin) - As Amended April 14, 2016
SUBJECT: Vehicle equipment: counterfeit and nonfunctional
airbags
SUMMARY: Prohibits the intentional manufacture, importation,
installation, reinstallation, distribution, sale, or offer for
sale of a counterfeit or nonfunctional airbag, and also
prohibits a person from knowingly and intentionally selling,
installing or reinstalling any device that would cause a
vehicle's diagnostic systems to fail to warn when the vehicle is
equipped with a counterfeit airbag or nonfunctional airbag,
violation of which is a misdemeanor punishable by a $5000 fine
and up to one year in jail. Specifically, this bill:
1)Prohibits the manufacture, importation, installation,
reinstallation, distribution, sale, or offer for sale of any
device with the intent that the device replace an airbag in
any motor vehicle if the person knows or reasonably should
know that the device is a counterfeit airbag or a
nonfunctional airbag, or does not meet federal safety
requirements, violation of which is a misdemeanor punishable
by a fine of up to five thousand dollars ($5,000) or by
imprisonment in a county jail for up to one year, or both.
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2)Prohibits a person from knowingly and intentionally selling,
installing or reinstalling in a vehicle, any device that
causes the vehicle's diagnostic systems to fail to warn when
the vehicle is equipped with a counterfeit airbag or
nonfunctional airbag, or when no airbag is installed,
violation of which is a misdemeanor punishable by a fine of up
to five thousand dollars ($5,000) or by imprisonment in a
county jail for up to one year, or both.
3)Deems a violation of either prohibition provided above to be
deemed an unfair or deceptive act or practice for purposes of
the Consumers Legal Remedies Act, with each act of
manufacture, importation, installation, reinstallation, sale,
or offer for sale constituting a separate and distinct
violation.
4)Provides that an installation or reinstallation shall not have
occurred for purposes of these provisions until the work is
complete.
5)Defines "airbag" to mean a motor vehicle inflatable occupant
restraint system device, including all component parts, such
as the cover, sensors, controllers, inflators, and wiring,
that the vehicle manufacturer recommends be replaced after
deployment that meets both of the following criteria:
a) Operates in the event of a crash; and
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b) Is designed in accordance with federal motor vehicle
safety standards for the specific make, model, and year
of the motor vehicle in which it is or will be installed.
6)Defines a "counterfeit airbag" to mean a replacement airbag
that displays a mark identical or substantially similar to the
genuine mark of a motor vehicle manufacturer or a supplier of
parts to the manufacturer of a motor vehicle without
authorization from the manufacturer of the motor vehicle or
supplier.
7)Defines a "nonfunctional airbag" to mean a replacement airbag
that meets any of the following criteria:
a) The airbag was previously deployed or damaged;
b) The airbag has an electric fault that is detected by
the vehicle's airbag diagnostic systems after the
installation procedure is completed; and
c) The airbag includes a part or object, including, but
not limited to, a counterfeit or repaired airbag cover or
airbag component, installed in a motor vehicle to mislead
the owner or operator of the motor vehicle into believing
that a functional airbag has been installed.
8)Deletes and recasts existing law that prohibits the
installation, reinstallation, rewiring, tampering, alteration
or modification for compensation of a vehicle's airbag systems
to falsely indicate the system is in proper working order, and
prohibits the knowing distribution or sale of a previously
deployed airbag or component that no longer meets the original
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equipment specifications.
9)Declares that no reimbursement is required pursuant to the
California Constitution because the only costs that may be
incurred by a local agency or school district will be incurred
because this act creates a new crime or infraction, eliminates
a crime or infraction, or changes the penalty for a crime or
infraction, or changes the definition of a crime.
EXISTING LAW:
1)Makes it a misdemeanor for a person to: (a) install,
reinstall, rewire, tamper with, alter, or modify for
compensation, a vehicle's computer system or supplemental
restraint system, otherwise referred to as an airbag, so that
it falsely indicates the supplemental restraint system is in
proper working order; or (b) knowingly distribute or sell a
previously deployed airbag or component that will no longer
meet the original equipment manufacturing form or function for
proper operation. Violations are a misdemeanor punishable by
a fine of up to $5000 and up to one year in county jail.
(Vehicle Code Section 27317)
FISCAL EFFECT: Unknown
COMMENTS:
1)Purpose of this bill . This bill is intended to curb the
illegal market for dangerous replacement vehicle airbags by
prohibiting the intentional manufacture, importation,
installation, reinstallation, distribution, sale or offer for
sale of counterfeit and nonfunctional airbags.
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2)Author's statement . According to the author, "AB 2387 is a
consumer protection measure. It strengthens existing laws
aimed at deterring the fraudulent distribution and
installation of counterfeit airbags by more clearly defining
key terms and increasing the penalty for knowingly exposing
the public to this potentially deadly hazard."
3)The counterfeit airbag problem . The National Highway Traffic
Safety Administration (NHTSA) states on its website that it
"has become aware of a problem involving the sale of
counterfeit air bags for use as replacement parts in vehicles
that have been involved in a crash. While these air bags look
nearly identical to certified, original equipment parts -
including bearing the insignia and branding of major
automakers - NHTSA testing showed consistent malfunctioning
ranging from non-deployment of the air bag to the expulsion of
metal shrapnel during deployment. NHTSA is not aware of any
deaths or injuries connected to counterfeit air bags."
NHTSA goes on to point out that: " [w]hile the full scope and
scale of the problem of counterfeit air bags is uncertain from
currently available data, NHTSA has identified certain vehicle
makes and models for which these air bags may be available and
believes this issue affects less than 0.1 percent of the U.S.
vehicle fleet. Only vehicles which have had an air bag
replaced within the past three years by a repair shop that is
not part of a new car dealership may be at risk."
4)Recent efforts to deal with counterfeit airbags . According to
the author, current state and federal law has been
insufficient to stop the trade in counterfeit and
nonfunctional airbags.
Since 2011, "Federal authorities have made at least 16 arrests
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across the county, including in California, relating to
counterfeit airbags. In these cases the Feds cited a violation
of federal trademark law (Title 19, Section 133.21), which
occurs when a registered trademark or a mark substantially
similar to a registered trademark is used on a fake airbag
without approval. Unfortunately, the majority of legitimate
airbags, including passenger and side-curtain airbags, do not
contain trademarks and therefore counterfeits cannot be
prosecuted or even confiscated by federal authorities. When
they are discovered by law enforcement they must eventually be
released and can find their way into the marketplace. Once in
the country, the manufacturer's insignia is attached and the
counterfeit product is sold."
With trademark law proving to be ineffective in stopping the
trade, "a coalition of stakeholders has enacted similar laws
to AB 2387 in ten states (AL, CT, FL, IA, LA, NJ, NM, NY, OH &
TX) by a combined vote of 1,386-1. This policy was also
adopted as model legislation by the Council of State
Governments in its 2015 'Suggested State Legislation' docket."
In modernizing the existing prohibition against the trade in
counterfeit airbags, this bill would do two things. First, by
defining the terms "airbag," "counterfeit airbag," and
"nonfunctional airbag" broadly, the statute would encompass
and prohibit all airbags not designed in accordance with
federal motor vehicle safety standards. Second, the bill
would take aim at the root of the problem by penalizing not
only the individuals who install counterfeit and nonfunctional
airbags, but those who intentionally manufacture, sell and
import them as well.
5)The Consumer Legal Remedies Act . The CLRA exists to provide
protection to consumers from unfair methods of competition and
unfair or deceptive acts or practices related to the sale or
lease of goods or services. The statute currently prohibits
26 commercial practices, which cover a range of general
misrepresentations as well as specific restrictions on
solicitations related to prerecorded messages, public social
service applications, home solicitations of senior citizens,
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and veteran's benefits.
The CLRA provides a range of remedies to an injured consumer,
including actual damages of at least $1000, injunction,
restitution, punitive damages, attorney's fees, and other
relief as the court may direct. The law also contains
provisions for class action suits. However, the CLRA provides
an affirmative defense for unintentional violations and bona
fide errors if corrected within 30 days of being notified by
the consumer.
6)Arguments in support . According to Honda, "In 2010, federal
authorities made Honda aware of a growing problem with cheap
and ineffective counterfeit bags entering the U.S. stream of
commerce from China. While those airbags looked authentic
from the outside?the counterfeiters were unable to replicate
the technology required to protect consumers in the event of a
collision?[M]any counterfeiters?chose to fill airbags with
sawdust, newspaper, paper towels, Styrofoam or other items
never intended to provide vehicle occupants with protection
during a crash?Over the past few years, several thousand
counterfeit airbags have been confiscated in raids across the
country."
"Despite their best efforts, federal agents have limited
authority to combat this problem. Federal authorities are
only able to prosecute counterfeiters when they violate
federal trademark law?Unfortunately the majority of legitimate
airbags, including passage and side-curtain airbags do not
contain trademarks and therefore fakes cannot be prosecuted
under trademark law. Even when these fake airbags are
discovered by authorities they must eventually be released and
can eventually find their way into the marketplace.
Additionally, counterfeiters are becoming increasingly aware
of this loophole and are shipping driver-side airbags without
the trademark in order to avoid confiscation and
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prosecution?Existing California laws relating to airbag fraud
do not address this specific and growing problem, but are
consistent with the legislature's original intent of
protecting consumers?"
According to auto safety advocates, Consumers for Auto
Reliability and Safety, "This bill will prohibit any person
from manufacturing, importing, installing, reinstalling,
selling, or offering for sale counterfeit or nonfunctioning
air bags. It will prohibit selling any device designed to
mislead car buyers into believing they have a fully
functioning air bag, by altering the vehicle's diagnostic
system . It will also make a knowing violation of these
prohibitions an unfair and deceptive act or practice, for
purposes of invoking the Consumer Legal Remedies Act, and a
felony criminal offense. Such acts are a serious threat to
motorists' safety. Unfortunately, too many dealers continue to
sell vehicles without air bags, inducing consumers to sign
contracts that state the dealer is not liable for the
condition of the air bags. Therefore, a blanket prohibition is
all the more important."
7)Recent negotiations . This bill was substantially amended to
recast and reorganize its original language. Significant
changes include lowering the penalty for violation from a
felony and five years in jail to a misdemeanor and one year in
jail.
Further discussions between the author, supporters and opponents
have been ongoing over the remaining issue of the precise
scope of the definition of "airbag." According to the
author's office and opponents, a tentative agreement over that
definition has been reached that would lead opponents to take
a neutral position, although no formal letter to that effect
has been received.
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8)Previous legislation . SB 869 (Yee), Chapter 430, Statutes of
2011, increased the penalty for a person who, after preparing
a written estimate to repair a deployed airbag, fails to
properly repair and restore that airbag to its original
condition to a misdemeanor penalty of up to one year in jail,
a $5,000 fine, or both.
SB 427 (Negrete McLeod) of 2009 would have established a
misdemeanor penalty of up to one year in jail, a $5,000 fine,
or both for an automotive repair dealer who prepared for a
customer a written estimate that includes replacement of a
deployed airbag and who fails to repair and restore the airbag
to original operating condition. Governor Schwarzenegger
vetoed SB 427, citing that it was duplicative of existing law
and, therefore, added little additional benefit to consumers.
9)Double-referral . This bill was double-referred to the
Assembly Public Safety Committee, where it was heard on April
5, 2016, and passed on a 7 to 0 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
Association of Global Automakers
Consumers for Auto Reliability and Safety (CARS)
Honda North America, Inc.
Alliance of Automobile Manufacturers (previous version)
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Automobile Club of Southern California (AAA) (previous version)
California Association of Highway Patrolmen (previous version)
California Professional Firefighters (previous version)
Ford Motor Company (previous version)
Opposition
Auto Dismantlers Association of Southern California (previous
version)
California Auto Dismantlers and Recyclers Alliance (previous
version)
Inland Auto Dismantlers Association (previous version)
State of California Auto Dismantlers Association (previous
version)
Valley Auto Dismantlers Association (previous version)
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LKQ Corporation (concerns) (previous version)
Analysis Prepared by:Hank Dempsey / P. & C.P. / (916) 319-2200