BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 1926 (Solorio) - Service contracts.
          
          Amended: As Introduced          Policy Vote: B,P&ED 7-0
          Urgency: No                     Mandate: Yes
          Hearing Date: June 25, 2012                       Consultant: 
          Bob Franzoia  
          
          This bill meets the criteria for referral to the Suspense File.


          Bill Summary: AB 1926 would include in the definition of service 
          contract a written contract for the performance of services 
          relating to the maintenance, replacement, or repair of optical 
          products, thereby making administrators and sellers of those 
          contracts subject to registration with the Bureau of Electronic 
          and Appliance Repair, Home Furnishings and Thermal Insulation.

          Fiscal Impact: Estimated $200,000 annually from the Electronic 
          and Appliance Repair Fund.
              Up to $75 initial (and annual) registration fee on up to 
              7,600 licensees (persons who maintain, replace or repair 
              optical products).
              Up to three personnel years for an investigator, a staff 
              services analyst and an office technician ongoing.

          Background: Service contracts cover a range of electronic and 
          home appliance products as well as furniture, jewelry, lawn and 
          garden equipment, power tools, fitness equipment, telephone 
          equipment small kitchen appliances and tools, and home health 
          care products.  Service contracts, sometimes referred to as 
          protection plans, extended warranties or maintenance agreements, 
          are purchased separately from the product.  Similar to insurance 
          policies, these contracts assure consumers that should something 
          go wrong with a product their investment is protected at a 
          fraction of the cost of out-of-pocket repair work.

          Proposed Law: Persons who maintain, replace or repair optical 
          products cannot offer service contracts because optical products 
          are not included in the definition of service contracts.  This 
          bill includes optical products in the definition of service 
          contract thereby requiring a written contract for the 
          performance of services relating to the maintenance, 








          AB 1926 (Solorio)
          Page 1


          replacement, or repair of optical products and making 
          administrators and sellers of those contracts subject to 
          licensing and regulation by the bureau.

          If this bill becomes law, a person who maintains, replaces or 
          repairs optical products could not offer a service contract 
          without being licensed and regulated by the bureau.
          
          By expanding the definition of service contract, this bill would 
          expand the scope of a crime and, thus, would impose a state 
          mandated local program.

          Staff Comments: This bill does not define optical product.