BILL ANALYSIS �
AB 1926
Page 1
ASSEMBLY THIRD READING
AB 1926 (Solorio)
As Introduced February 22, 2012
Majority vote
BUSINESS & PROFESSIONS 9-0
APPROPRIATIONS 17-0
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Fuentes, Harkey, |
| |Allen, Butler, Eng, | |Blumenfield, Bradford, |
| |Hagman, Hill, Ma, Smyth | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Adds a written contract for the performance of
services related to the maintenance, replacement, or repair of
optical products to the definition of service contract, thereby
subjecting the administrators and sellers of those contracts to
the Electronic Appliance Repair Dealer Registration Law (EARDRL)
and requiring them to register with the Bureau of Electronic and
Appliance Repair (BEAR), Home Furnishings and Thermal
Insulation.
EXISTING LAW :
1)Regulates service contracts relating to the maintenance or
repair of specified sets and appliances by the BEAR.
2)Prohibits any person to act as a service contract
administrator or service contract seller without first
registering with the BEAR.
3)Provides that a violation of EARDRL provisions is deemed to be
unlawfully transacting the business of insurance, and
therefore subject to specified criminal penalties.
4)Defines "service contract" as a contract in writing to
perform, over a fixed period of time or for a specified
duration, services relating to the maintenance, replacement,
AB 1926
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or repair of an electronic set or appliance, and their
accessories; furniture; jewelry; lawn and garden equipment;
power tools; fitness equipment; telephone equipment; small
kitchen appliances and tools; or home health care products;
and may include provisions for incidental payment of indemnity
under limited circumstances, as specified.
5)Provides that "service contract" does not include a contract
in writing to maintain structural wiring associated with the
delivery of cable, telephone, or other broadband
communications services.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, BEAR currently has 18,900 licensees. It is estimated
that this legislation could add over 7,600 additional licensees.
On-going costs associated with those additional licenses would
be approximately $200,000 per year (Electronic and Appliance
Repair Fund), which would be fully offset by fees.
COMMENTS : According to the author, "While most states do not
specify in statute the categories of products falling under
service contracts, California has gradually developed the
laundry list of product categories identified above. This means
that when a new product is developed, a revision to the statute
is required in order for a service contract insuring that
product to be sold. To illustrate, optical products are not
included in the definition of service contracts, so BEAR does
not have the ability to authorize the sale of service contracts
covering optical products (e.g. eyeglasses).
"AB 1926 solves this problem by broadening the statutory
definition of service contracts to include optical products,
thereby enabling these types of service contracts to be sold.
Optical service contracts have become a popular product in
virtually every state with one in three customers opting to
purchase the coverage. This national trend underscores the need
for the inclusion of optical products within the definition of
service contracts so that a wider range of products commonly
purchased by consumers may be protected against damage or loss."
Service contracts, sometimes called extended warranties or
maintenance agreements, are bought separately from the product.
Similar to insurance policies, these contracts assure consumers
that should something go wrong with a product, their investment
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is protected at a fraction of the cost of out-of-pocket repair
work.
Initially, service contracts were offered and sold by the
manufacturer of the product, or by the retailer who sold the
product. However, due to the complexity of administering an
extended service plan, a growing number of retailers and
manufacturers have turned to third-party firms to handle the
programs. These firms are paid by retailers and manufacturers
to handle the day-to-day responsibilities of managing service
contracts and providing assistance to the consumer.
BEAR regulates service contractors who sell service contracts
for the repair of consumer electronics and appliances in
California. BEAR can fine violators or revoke or suspend their
registration. EARDRL further protects consumers by requiring
that service contractors provide the service guaranteed in the
service contract. An additional protection for consumers
requires that service contractors provide financial backing for
the service contracts issued.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
FN: 0003327