BILL ANALYSIS �
AB 2324
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Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 2324 (Gatto) - As Amended: March 29, 2012
As Proposed to be Amended
SUBJECT : VEHICLE SALES CONTRACTS
KEY ISSUE : SHOULD THE VEHICLE SALES CONTRACTS STATUTE BE
AMENDED TO PROVIDE IMPROVED CONSUMER DISCLOSURES?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill reflects the author's ongoing efforts to simplify the
automobile sales contract. In its current form, the bill would
revise the insurance coverage disclosure. The author's ultimate
goal is more ambitious, and talks among interested stakeholders
continue in an effort to reach the further consensus to which
the author is committed. With that understanding and in this
form, there is no known opposition.
SUMMARY : Clarifies consumer disclosures in new car sales
contract. Specifically, this bill would revise and update the
consumer disclosure regarding the availability and coverage of
insurance policies that may be offered by a dealer.
EXISTING LAW provides that every conditional sales contract
shall contain a statement in contrasting red print in at least
8-point bold type which shall satisfy the requirements of
Section 5604 of the Vehicle Code and be signed or initialed by
the buyer, as follows:
Warning:
Your present policy may not cover collision damage or may
not provide for full replacement costs for the vehicle
being purchased. If you do not have full coverage,
supplemental coverage for collision damage may be available
to you through your insurance agent or through the selling
dealer. However, unless otherwise specified, the coverage
you obtain through the dealer protects only the dealer,
usually up to the amount of the unpaid balance remaining
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after the vehicle has been repossessed and sold.
For advice on full coverage that will protect you in the
event of loss or damage to your vehicle, you should contact
your insurance agent.
(Civil Code Section 2984.1.)
COMMENTS : In support of the bill, the author states:
Consumer contracts for major purchases such as cell phones
and other "big ticket" items like, in this case, autos have
simply become too long and cumbersome, often resulting in
the opposite of what they are meant to do - provide
consumers with information about their rights and
protections under the law. Over the years, with the best
of intentions, legislative actions have resulted in the
requirement of more and more things needing to be included
in a consumer contract in the interest of educating
consumers about their rights and recourses under the law.
What often occurs, however, is information overload, where
a consumer is overwhelmed with the sheer volume of
information and ends up signing the contract and reading
less of it, if they even read it at all. The net result is
that consumers are often less aware of the protections
afforded to them under law. This bill is an attempt to
address this issue as it pertains to car contracts.
The Current Provisions Of The Bill Reflect The Author's Initial
Efforts To Seek Consensus Among Interest Groups . The author
reports that he has convened a series of meetings with
stakeholders including new car dealers, consumer attorneys and
automobile consumer advocates on the issue of simplifying these
contracts, and that there has been tentative agreement to work
in this area. Among the areas for improvement that have been
discussed: Simplifying the language in sections of the contract
with the goal of reducing the size of some of the sections,
removing parts of the contract that deal with products that are
no longer offered by car dealers, removing redundant language.
The current contents of the bill reflect the author's initial
step towards a more comprehensive simplification of the consumer
auto contract regarding the disclosure pertaining to insurance
coverage for the vehicle. The author is committed to moving the
bill forward only with the consensus of all stakeholders and the
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involvement of the Committee, and with the knowledge that it
will be necessary for the bill to return for further
consideration by the Committee when and if the bill takes on
additional content.
Proposed Author's Amendments . To correct drafting errors and
simplify the scope of the bill, the author proposes the
following beneficial amendments.
Retain a provision of existing law in section 1 of the bill
stating:
WARNING:
YOUR PRESENT POLICY MAY NOT COVER COLLISION DAMAGE OR MAY NOT
PROVIDE FOR FULL REPLACEMENT COSTS FOR THE VEHICLE BEING
PURCHASED.
Delete section 2 of the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334