BILL NUMBER: AB 547 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 31, 2011
INTRODUCED BY Assembly Member Gatto
FEBRUARY 16, 2011
An act to amend Section 1812.101 of the Civil Code,
relating to discount buying organizations. An act to
amend Section 18070.2 of the Health and Safety Code, relating to
manufactured housing.
LEGISLATIVE COUNSEL'S DIGEST
AB 547, as amended, Gatto. Discount buying organizations.
Manufactured Home Recovery Fund: fee modification.
Existing law establishes the Manufactured Home Recovery Fund,
which is continuously appropriated to make payments and distributions
for actual and direct losses, as defined, arising out of specified
transactions regarding the purchase or sale of a manufactured home,
if certain conditions are met. Existing law prescribes a fee
collected by the Department of Housing and Community Development for
each reported sale of a manufactured home, to be deposited in the
fund. Whenever the balance in the fund exceeds $1,000,000 the
department is authorized to reduce or increase the fee, respectively.
This bill would instead provide that the department may reduce the
fee when the balance exceeds $2,000,000.
Existing law regulates membership contracts for discount buying
organizations. Discount buying organization is defined for these
purposes to include any person or persons, corporation,
unincorporated association, or other organization that, for a
consideration, provides or purports to provide its clients or the
clients or members of any other discount buying organization with the
ability to purchase goods or services at discount prices. Certain
discount buying organizations are exempted from these provisions.
This bill would make a technical change by referring in that
definition to an entity, among other technical, nonsubstantive
changes.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 18070.2 of the
Health and Safety Code is amended to read:
18070.2. (a) Fees for the establishment and operation of the
Manufactured Home Recovery Fund shall be collected on or after
January 1, 1985. Claims against the fund arising from sales which
occur after January 1, 1985, may not be submitted to the department
before January 1, 1986. For purposes of this section, the date of
sale shall be either of the following:
(1) The date escrow closes for sales by dealers that are subject
to Section 18035 or 18035.2.
(2) For all other sales, including sales by dealers in which
escrow does not close, the date when the purchaser has paid the
purchase price or, in lieu thereof, has signed a security agreement,
option to purchase, or purchase contract and has taken physical
possession or delivery of the manufactured home.
(b) Notwithstanding any other provision of law, whenever the
balance in the Manufactured Home Recovery Fund exceeds one
two million dollars ($1,000,000)
($2,000,000) on January 1 of any year, the
department may reduce the fee provided for in subdivision (c) of
Section 18070.1. The department may again increase the fee up to a
maximum of ten dollars ($10) whenever the balance in the fund falls
below one million dollars ($1,000,000).
SECTION 1. Section 1812.101 of the Civil Code
is amended to read:
1812.101. For the purpose of this title, the following
definitions shall apply:
(a) "Discount buying organization" means any person or persons,
corporation, unincorporated association, or other organization or
entity that, for a consideration, provides or purports to provide its
clients or the clients or members of any other discount buying
organization with the ability to purchase goods or services at
discount prices, except that a discount buying organization does not
include any of the following:
(1) Any discount buying organization in which the total
consideration paid by each client or member in any manner whatsoever
for the purchase of discount buying services from the organization
that either:
(A) Does not exceed a one-time fee of fifty dollars ($50) or an
annual fee of twenty-five dollars ($25) to be paid on a yearly basis.
(B) Does not exceed a one-time or annual fee of fifty dollars
($50) and the organization provides a majority of the goods and
services through purchases by members who walk in to a fixed location
operated by the organization.
(2) Any discount buying organization in which the total
consideration paid by each client or member in any manner whatsoever
for the purchase of discount buying services from the organization
does not exceed a one-time or annual fee of one hundred dollars
($100), and the organization is described by all of the following in
subparagraphs (A) to (F), inclusive, but subject to subparagraph (G):
(A) Offers buying services to clients or members through toll-free
telephone access, computer access, or video shopping terminals.
(B) (i) During the first year of membership of each member, upon
the request of the member, provides a full refund of membership fees,
exclusive of any fees, however designated, not exceeding ten dollars
($10) in the aggregate, without conditions other than the surrender
or destruction of materials that allow the member to access or use
the service.
(ii) (I) The organization shall establish an escrow account of
fifty thousand dollars ($50,000) for the purpose of providing refunds
to members, pursuant to clause (i). If the fifty thousand dollars
($50,000) deposited in escrow is depleted during the first year of
the existence of the escrow account, the organization shall, within
three business days of depletion, replenish the account in the amount
of fifty thousand dollars ($50,000). For each calendar year
thereafter, the organization shall deposit in the account an amount
equal to refunds made from the account in the prior calendar year,
but not less than fifty thousand dollars ($50,000). At any time the
balance in the escrow account decreases to 50 percent of the amount
funded that year, the organization shall, within three business days,
replenish the account back to the balance required at the beginning
of that calendar year. The organization shall provide proof of the
establishment of the escrow account to the Secretary of State and
shall maintain records of all member requests for refunds and refunds
made pursuant to this clause. The records shall be made available
for review upon request of the Attorney General, any district
attorney, or the Department of Justice.
(II) The escrow account shall be established and maintained at a
federally insured bank or federally insured financial institution
independent of the organization with escrow instructions making the
bank or financial institution or an officer or employee thereof the
escrow trustee.
(III) Refunds shall be made from the escrow account to any member
who provides proof of membership while a California resident and
requests, in writing, a membership refund, and has not previously
been refunded his or her membership fee. The escrow trustee shall
issue the refund within 10 days of the date the written request is
received by the escrow trustee. In addition, requests for refunds may
be made directly to, and paid directly by, the organization.
(IV) Proof of creation of the escrow account, and membership
refund information, shall be provided to the members in the following
form:
"The ____ (organization) has established an escrow account for the
refund of membership fees at ____ (financial institution). Refunds
from the escrow account may, in addition to other remedies and
sources available to you, be obtained by mailing a written request
along with proof of membership to ____ (escrow trustee). This refund
request shall not affect or limit any other remedy at law available
to you."
(C) Provides at least 15 toll-free service lines to California
consumers devoted exclusively to customer service questions and
complaints.
(D) Maintains a bond that meets the requirements of Sections
1812.103 and 1812.104, except that the principal sum of the bond need
only be twenty thousand dollars ($20,000).
(E) (i) Possesses an unrevoked acknowledgment from the Attorney
General that the organization has provided to the Attorney General,
to the Attorney General's reasonable satisfaction, marketing
procedures and documents that clearly explain membership fee
cancellation and refund terms, which include:
(I) The amount of the initial membership fee and the process and
timing for its collection.
(II) If applicable, that a member shall be advised, before any
charges are applied, that they need not provide billing information
in order to be charged a membership fee, in circumstances in which
the telemarketing firm has prior access to the member's billing
information.
(III) In the case of trial membership offers, the duration of the
trial period, and notice that if the member does not cancel within
the trial period, he or she will automatically be charged the
membership fee.
(IV) The specific process by which the member may cancel
membership.
(V) The written disclosure, printed in capital letters with a
minimum 14-point boldface type, indicating who to contact, both
directly through the company and through the escrow account, for a
refund.
(VI) The written disclosure made at the time of solicitation and
at the time an enrollment package is sent to consumers.
(ii) When an organization provides documentation that clearly
explains membership fee cancellation and refund terms to the Attorney
General's reasonable satisfaction, which includes the information
required by subclauses (I) to (VI), inclusive, of clause (i) of
subparagraph (E), the Attorney General shall issue a revocable
acknowledgment to the organization for it to obtain this exception.
The acknowledgment issued by the Attorney General is not evidence of
the adequacy or accuracy of the organization's actual disclosures and
representations provided to consumers. No organization in any
marketing to consumers may make any reference to an acknowledgment
issued by the Attorney General under this clause.
(F) Provides the disclosures listed in subclauses (I) to (VI),
inclusive, of clause (i) of subparagraph (E) to every prospective
member.
(G) The exemption provided in paragraph (2) is null and void if
the organization fails to comply with the conditions set forth in
this section, or if the Attorney General's office revokes the
exemption due to an organization not being in full compliance with
all of the provisions of this section.
(3) Any discount buying organization in which persons receive
discount buying services incidentally as part of a package of
services provided or available to the individual on account of his or
her membership in the organization, which is not organized for the
profit of any person or organization, and which does not have as one
of its primary purposes or businesses, the provision of discount
buying services.
(4) Any person, corporation, unincorporated association, or other
organization or entity, which, for a consideration collected from
another entity, provides or purports to provide the clients of the
other entity with the ability to purchase goods or services at
discount prices, if the clients of the other entity do not order
from, or pay any money to, that person, corporation, unincorporated
association, or other organization or entity. However, the entity
from which the customer purchases the right to obtain goods or
services at discount prices shall comply with the requirements of
this title.
(b) "Contract for discount buying services" means a contract
between one party, hereafter referred to as the "buyer," who is
purchasing the services for personal or family use, and a discount
buying organization, whereby the buyer, for a consideration, receives
the right to obtain goods or services from the discount buying
organization, or to utilize the discount buying organization services
in obtaining goods and services, at discount prices.
(c) "Discount prices" means prices that are represented to be
lower on most or all offered goods or services than those generally
charged for the items in the locality in which the representation is
made.
This definition is not intended to affect the degree of savings
that must be offered on an item or selection of items in order to
truthfully, and without misleading consumers, represent an item,
selection of items, or entire store as being "discount" or
"discounted."