BILL ANALYSIS �
AB 2324
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ASSEMBLY THIRD READING
AB 2324 (Gatto)
As Amended April 23, 2012
Majority vote
JUDICIARY 10-0
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|Ayes:|Feuer, Wagner, Atkins, | | |
| |Dickinson, Gorell, Huber, | | |
| |Jones, Monning, | | |
| |Wieckowski, Alejo | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Clarifies consumer disclosures in new car sales
contracts. 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
Vehicle Code Section 5604 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
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.
FISCAL EFFECT : None
COMMENTS : In support of the bill, the author states, "Consumer
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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 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, and 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
involvement of the Assembly Judiciary Committee, and with the
knowledge that it will be necessary for the bill to return for
further consideration by the Assembly Judiciary Committee when
and if the bill takes on additional content.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0003419
AB 2324
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