BILL ANALYSIS
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THIRD READING
Bill No: AB 63
Author: Mendoza (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-2, 6/9/09
AYES: Corbett, Florez, Leno
NOES: Harman, Walters
ASSEMBLY FLOOR : 50-28, 3/23/09 - See last page for vote
SUBJECT : Service contracts: retailers
SOURCE : Author
DIGEST : This bill requires retailers that sell service
contracts to do one of the following during the period that
the service contract is in effect: (1) maintain contract
information that includes a description of the terms and
conditions of the service contract and provide that
information to the purchaser upon request; or (2) obtain a
copy of the service contract and provide that copy to the
requester within 10 business days after receiving the
request. This bill does not apply to a vehicle service
contract that covers the repair, replacement, or
maintenance of a motor vehicle or watercraft, as specified.
ANALYSIS : Existing law, the Song-Beverly Consumer
Warranty Act, establishes a number of requirements for the
sale and purchase of express warranties and service
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contracts sold in lieu of a warranty. (Civ. Code Sec. 1790
et seq.)
Existing law permits the sale of a service contract in lieu
of a warranty to a buyer if that contract fully and
conspicuously discloses in simple and readily understood
language the terms, conditions, and exclusions of that
contract, except for a home protection contract issued by a
home protection company. (Civ. Code Sec. 1794.4 et seq.)
Existing law also obligates the service contractor to
provide to the buyer of the product all of the services and
functional parts that may be necessary to maintain proper
operation of the entire product under normal operation and
service for the duration of the service contract and
without additional charge. (Civ. Code Sec. 1794.4(b).)
Existing law requires a service contract sold in lieu of a
warranty to include:
1. A clear description and identification of the covered
product.
2. The point in time or event when the term of the
service contract commences, and its duration measured
by elapsed time or an objective measure of use.
3. A description of the limits on transfer or assignment
of the service contract.
4. A statement of the general obligation of the service
contractor.
5. Any additional services that the service contractor
will provide.
6. Whether the obligation of the service contractor
includes preventive maintenance and, if so, the nature
and frequency of the preventive maintenance that the
service contractor will provide.
7. Whether the buyer has an obligation to provide
preventive maintenance or perform any other
obligations.
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8. A step-by-step explanation of the procedure that the
buyer should follow in order to obtain performance of
any obligation under the service contract.
9. An explanation of the steps that the service
contractor will take to carry out its obligations
under the service contract.
10. A description of any right to cancel the contract if
the buyer returns the product or the product is sold,
lost, stolen, or destroyed, or, if there is no right
to cancel or the right to cancel is limited, a
statement of the fact.
11. Information respecting the availability of any
informal dispute settlement process. (Civ. Code Sec.
1794.4(c).)
This bill requires a retailer that sells a service contract
pursuant to Section 1794.4 to do either of the following
during the period that the service contract is in effect:
(1) maintain contract information that includes the terms
and conditions of the service contract and provide that
information to the purchaser of the service contract, or
other beneficiary upon request; or (2) upon request from
the purchaser of the service contract, or other
beneficiary, to obtain a copy of the service contract and
provide that copy to the requester within 10 business days
after receiving the request.
This bill provides that the above provisions do not apply
to a vehicle service contract that covers the repair,
replacement, or maintenance of a motor vehicle or
watercraft, or the indemnification thereof, as defined in
subdivision (c) of Section 12800 of the Insurance Code.
Prior Legislation
AB 1866 (Mendoza) of 2008, which passed the Senate on
8/5/08 (22-11), was an identical bill that the Governor
vetoed without comment as to its merit, due to the delay in
passage of the 2007-2008 state budget.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/10/09)
Consumer Federation of California
American Federation of State, County, and Municipal
Employees, ALF-CIO
ARGUMENTS IN SUPPORT : According to the author's office,
many retailers do not maintain service contract information
and instead place the responsibility on the consumer to
retain documentation of the contract. Part of the
problem, the author asserts, is that consumers regularly
lose the physical service contract agreement during the
period that the contract is in effect. Because some
service contracts can cover up to five years or more of a
product's life, it is unreasonable, the author argues, to
only expect the consumer to maintain the physical
agreement. Therefore, the author asserts that the retail
seller of the service contract should share the
responsibility of maintaining the agreement during the
period it is in effect or at least obtain a copy of the
contract and provide it to the consumer upon request.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Blakeslee, Block,
Blumenfield, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Coto, De La Torre, De Leon,
Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani,
Hall, Hayashi, Hernandez, Hill, Huffman, Jones,
Krekorian, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning,
Nava, John A. Perez, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Skinner, Solorio, Audra Strickland,
Swanson, Torlakson, Torres, Torrico, Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Conway, Cook, DeVore, Duvall, Emmerson, Fletcher, Fuller,
Gaines, Garrick, Gilmore, Hagman, Harkey, Huber,
Jeffries, Knight, Logue, Miller, Nestande, Niello,
Nielsen, Silva, Smyth, Tran, Villines
NO VOTE RECORDED: Davis, Price
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RJG:nl 6/10/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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