BILL ANALYSIS
AB 2118
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Date of Hearing: April 5, 2010
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 2118 (Hernandez) - As Amended: March 11, 2010
SUBJECT : New car sales: credit score disclosure
SUMMARY : Requires vehicle dealers to provide a credit score
disclosure notice that conforms to federal requirements.
Specifically, this bill : Requires a vehicle dealer who obtains
a consumer credit score from a consumer credit reporting agency
in regard to the potential purchase or lease of a motor vehicle
for personal, family, or household use, to provide the consumer
prior to the sale or lease of the vehicle, in at least 10-point
type on a document separate from the sale or lease contract, a
credit score disclosure notice that meets the form and content
requirements in the Code of Federal Regulations, as those
requirements may be amended.
EXISTING LAW : Requires a dealer who obtains a consumer credit
score from a consumer credit reporting agency for use in
connection with an application for credit initiated by a
consumer for the purchase or lease of a motor vehicle for
personal, family, or household use, to provide, prior to the
sale or lease of the vehicle, the following information to the
consumer in at least 10-point boldface type on a document
separate from the sale or lease contract:
1)The credit score obtained and used by the dealer and the name
of the credit reporting agency providing the credit score to
the dealer.
2)The range of possible credit scores established by the credit
reporting agency that provided the credit score.
3)A notice that includes the name, address, and telephone number
of each credit reporting agency providing a credit score that
was obtained and used by the dealer and informs the consumer
of his or her rights if the dealer has obtained and used a
credit score from a credit reporting agency in connection with
the consumer's application to finance the acquisition of a
vehicle.
FISCAL EFFECT : Unknown
AB 2118
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COMMENTS : The author is carrying this bill to conform
California statutes with newly adopted regulations from the
Federal Trade Commission (FTC) regarding credit score
disclosures for vehicle customers. His intent is to make clear
that only the federal form, which has been judged easier to
understand than the current California version, is required to
be provided to a consumer when his or her consumer credit score
has been obtained by a vehicle dealer as part of the process to
buy or lease a motor vehicle.
The author reports that "the FTC's 'Risk Based Pricing'
regulations require businesses that use credit reports to make
financing decisions to provide a notice to a limited category of
consumers who are granted credit on terms 'materially less
favorable than the most favorable terms available to a
substantial proportion of consumers.' Since it would be
extremely difficult for the average car dealer to undertake a
complicated statistical analysis to determine which customers
fall into the above category, the FTC's final rule permits
dealers to instead provide every customer applying for credit
with a new federal credit score disclosure form containing the
consumer's credit score and relevant information concerning
their credit score. The new federal credit score disclosure
notice is more comprehensive than, and improves upon, the credit
score disclosure notice currently required by the California
Vehicle Code.
"Since the FTC regulations (which take effect January 1, 2011)
allow dealers to provide credit score disclosures in lieu of
risk-based pricing notices, state legislation is needed to
harmonize California's credit score disclosure requirements with
the new FTC rules. Without this change, dealers would be faced
with providing two separate credit score disclosures, adding
unnecessary expense and confusing consumers."
Legislative history : AB 68 (Montanez) Chapter 128, Statutes of
2005, commonly referenced as the Car Buyers Bill of Rights,
established the current statutory requirement regarding credit
score disclosures.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 2118
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California New Car Dealers Association (sponsor)
Opposition
None received
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093