BILL ANALYSIS
AB 63
Page 1
ASSEMBLY THIRD READING
AB 63 (Mendoza)
As Introduced December 9, 2008
Majority vote
BUSINESS & PROFESSIONS 6-4
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|Ayes:|Hayashi, Eng, Hernandez, | | |
| |Nava, | | |
| |John Perez, Ruskin | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Cook, Conway, Niello, | | |
| |Smyth | | |
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SUMMARY : Requires a retailer selling a service contract to
maintain the service contract information and make the contract
available to the purchaser upon request, as specified.
Specifically, this bill :
1)Requires a retailer that sells a service contract to do either
of the following during the period that the service contract
is in effect:
a) Maintain contract information that includes a
description of the terms and conditions of the service
contract and provide that information to the purchaser or
other beneficiary upon request; or,
b) Obtain a copy of the service contract, and provide a
copy of the service contract to the requester within 10
business days upon request from the purchaser of the
service contract or other beneficiary.
2)Specifies that the requirements of this bill do not apply to a
vehicle service contract.
EXISTING LAW authorizes the sale of service contracts obligating
the service contractor to provide to the buyer of the product,
without additional charge, all of the services and functional
parts that may be necessary to maintain proper operation of the
product for the duration of the contract, except as specified.
AB 63
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FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS : According to the author's office, "Consumers often
misplace their receipt or warranty and are forced to return to
the store where they purchased the extended warranty. Many
retailers do not keep this information and place the
responsibility on the consumer to retain documentation for the
contract." This bill would require retailers who sell service
contracts to retain the information necessary for the customer
to redeem them.
Initially, the majority of service contracts were offered and
sold by the manufacturer or by the retailer. Due to the
complexity of administering an extended service plan, a growing
number of retailers and manufacturers enlist third-party firms
to handle their service obligations. These third-party firms
are paid by the retailer or manufacturer to handle the everyday
responsibility of managing their service contracts and for
providing assistance to the consumer.
Although the service contract industry was relatively small at
the outset it began to expand by the mid-1990's as major
technological advances were created and provided at the retail
level. In 1993, the San Francisco Chronicle reported that
Californians were spending approximately $500 million annually
on some form of service warranties. However, only 50% of
consumers who purchased service contracts could seek recourse
under existing state laws when they encountered problems with
their agreements. Moreover, retail sellers were disclosing
scarce information about the third party responsible for the
performance of the contract. Overall, it was widely reported
that consumers were not receiving the benefits or the services
in the agreements they were buying from retailers.
Based on consumer complaints, the Legislature passed SB 798
(Rosenthal) Chapter 1265, Statutes of 1993, which provided the
Bureau of Electronic and Appliance Repair the authority to
enforce regulations for the conduct of service contractors and
for the general enforcement of retail service contract law.
Additionally, SB 798 required more thorough disclosure of the
parties responsible for the services contained in the contract
as well as detailed procedures that the buyer can follow in
order to obtain performance of any obligation under the
AB 63
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contract.
AB 1866 (Mendoza) of 2008 was an identical bill that the
Governor vetoed. The Governor vetoed a substantial number of
bills that year with the same message that, due to the delay in
passing the 2008-2009 State Budget, he would only sign bills
that were "the highest priority for California." AB 1866 was
vetoed for this reason.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0000206