BILL ANALYSIS
-----------------------------------------------------------------------
|Hearing Date:June 8, 2009 |Bill No:AB |
| |1074 |
-----------------------------------------------------------------------
SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 1074Author:Conway
As Introduced: February 27, 2009 Fiscal:Yes
SUBJECT: Contractors: fraudulent license numbers.
SUMMARY: Makes it a crime for a licensed or unlicensed person to
willfully and intentionally use with the intent to defraud a number
that does not correspond to the number on a currently valid
contractor's license held by that person
Existing law:
1)Licenses and regulates more than 250,000 contractors by the
Contractors State License Board (CSLB) within the Department of
Consumer Affairs (DCA).
2)Makes it a crime for a licensed or unlicensed person to willfully and
intentionally use with the intent to defraud a contractor's license
number that does not correspond to the number on a currently valid
contractor's license held by that person.
3)Provides that the crime is punishable as a felony or misdemeanor
(wobbler) by a fine not exceeding $10,000, or by imprisonment in
state prison, or in county jail for not more than one year, or by
both fine and imprisonment.
4)Further provides, that if, upon investigation, the registrar of the CSLB
has probable cause to believe that an unlicensed individual is in
violation of the provisions above, the registrar may issue a
citation to that person.
This bill:
1) Recasts Existing law item #2, to instead make it a crime for a
AB 1074
Page 2
licensed or unlicensed person to willfully and intentionally use
with the intent to defraud a number that does not correspond to the
number on a currently valid contractor's license held by that
person.
FISCAL EFFECT: The Assembly Appropriations Committee analysis dated
April 29, 2009 cites minor, if any, non-reimbursable local
incarceration costs.
COMMENTS:
1.Purpose. This bill is Sponsored by the Contractors State License
Board (Sponsor) to delete the reference to use of a "contractor's
license number" in Business and Professions Code Section 7027.3.
According to CSLB, this would make it clear that any person who
claims to have a contractor's license number and does not have one
issued to them by the state would be in violation of the law. They
would then be subject to the same punishment as a contractor would
receive for claiming another's license number as their own,
according to the CSLB.
CSLB states: "Some contractors who do not have a license continue to
do business under another contractor's number or a completely
made-up number. Under current Business and Profession's code, it is
illegal to falsely use an existing contractor's license number when
it legally belongs to another. However, the issue of a contractor
making-up a number is not mentioned. Home and business owners are
being taken advantage of through this loophole."
2.Background. The CSLB issues licenses to contractors who meet
certain experience and knowledge requirements within their practice.
There are more than 250,000 licensed contractors in the state, in
43 different licensing classifications. In addition to educating
consumers about contractors and construction law, the CSLB
administers examinations to test prospective licensees, issues
licenses, investigates complaints against licensed and unlicensed
contractors, issues citations, takes disciplinary action to suspend
or revoke licenses, and seeks administrative, criminal, and civil
sanctions against violators. In general, all building projects that
exceed $500 and are not performed by the owner are required to be
performed by a contractor licensed by the CSLB.
3.Arguments in Support. According to the CSLB: "Contractor fraud,
most of which involves unlicensed contractors, consistently ranks in
AB 1074
Page 3
the top ten lists of consumer complaints both nationally and
statewide. According to the U. S. Office of Consumer Affairs,
unscrupulous contractors defraud consumers of more than $100 billion
annually." CSLB indicates that it regularly investigates cases
where an unlicensed contractor represents a random number as a
contractor's license number to consumers who unwittingly believe
that the number is a legitimate contractor license number. CSLB
states, "The Application of the felony penalty under B&P section
7027.3 should not be restricted to those instances where an actual
contractor's license number was used. Rather, the provisions of the
section should be expanded to include those instances where a
non-licensee defrauds a consumer by using an arbitrary number to
represent a contractor's license."
American Subcontractors Association California, Inc . states that
licensed subcontractors suffer from underground and unscrupulous
competitors who defraud consumers by misrepresenting their licensure
status, and believes that clamping down on these activities will
protect consumers as well as those who lawfully conduct their
business.
California Landscape Contractors Association writes, "AB 1074 gives
the CSLB an additional tool to fight unlicensed contracting
activity. It addresses an increasingly common problem where persons
engaged in unlicensed contracting activity use a random six-digit
number or a local business license number in advertisements,
business cards, or on their vehicles in order to trick consumers
into believing that the number represents a valid contractor's
license number."
NOTE : Double-referral to Public Safety Committee (second).
SUPPORT AND OPPOSITION:
Support:
Contractors State License Board (Sponsor)
American Subcontractors Association California, Inc.
California Chapter of the American Fence Contractors' Association
California Fence Contractors' Association
California Landscape Contractors Association
Construction Industry Legislative Council
Engineering Contractors' Association
Flasher/Barricade Association
Golden State Builders Exchange
AB 1074
Page 4
Law Offices of Adbulaziz, Grossbart, & Rudman
Marin Builders' Association
Painting and Decorating Contractors of California, Inc.
Opposition:
None received as of June 2, 2009
Consultant:G. V. Ayers