Amended in Assembly April 10, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1732

Introduced by Assembly Member Stone

February 14, 2014

An act to amend begin delete Section end delete begin insert Sections end insert 11713 begin insert , 11713.1, and 11713.16 end insert of the Vehicle Code, relating to vehicles.

LEGISLATIVE COUNSEL’S DIGEST

AB 1732, as amended, Stone. Vehicles: manufacturers begin delete and distributors. end delete begin insert , distributors, and dealers. end insert

Existing law generally requires a manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to be licensed by the Department of Motor Vehicles. Existing law prohibits these licensees from engaging in certain practices, including, failing to, within 48 hours, withdraw in writing an advertisement of a vehicle that has been sold or withdrawn from sale and advertising or representing a vehicle as a new vehicle if the vehicle is a used vehicle. Existing law makes it a crime to violate these provisions.

This bill would additionally prohibit a licensee from advertising a vehicle’s prior use or ownership history in an inaccurate manner. By expanding the scope of a crime, the bill would impose a state-mandated local program.

begin insert

Existing law makes it a violation for the holder of a dealer’s license to, among other things, use “rebate” or similar words in advertising the sale of a vehicle unless the rebate is expressed in a specified dollar amount and is in fact a rebate offered by the vehicle manufacturer or distributor. Existing law also makes it a violation to advertise as the total sales price of a vehicle an amount that includes a deduction from a rebate, except as specified.

end insert begin insert

This bill would additionally authorize the use of “rebate” if the rebate meets the requirements described above and is offered by a finance company affiliated with a vehicle manufacturer or distributor, a regulated utility, or a government entity. The bill would also prohibit a dealer from advertising a rebate reduction that conflicts with another advertised rebate deduction. By expanding the scope of a crime, the bill would impose a state-mandated local program.

end insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 11713 of the Vehicle Code is amended
to read:

11713.  

A holder of a license issued under this article shall not
do any of the following:

(a) Make or disseminate, or cause to be made or disseminated,
before the public in this state, in a newspaper or other publication,
or an advertising device, or by public outcry or proclamation, or
in any other manner or means whatever, a statement that is untrue
or misleading and that is known, or that by the exercise of
reasonable care should be known, to be untrue or misleading; or
to so make or disseminate, or cause to be so disseminated, a
statement as part of a plan or scheme with the intent not to sell a
vehicle or service so advertised at the price stated therein, or as so
advertised.

(b) (1) (A) Advertise or offer for sale or exchange in any
manner, a vehicle not actually for sale at the premises of the dealer
or available to the dealer directly from the manufacturer or
distributor of the vehicle at the time of the advertisement or offer.
However, a dealer who has been issued an autobroker’s
endorsement to his or her dealer’s license may advertise his or her
service of arranging or negotiating the purchase of a new motor
vehicle from a franchised new motor vehicle dealer and may
specify the line-makes and models of those new vehicles.
Autobrokering service advertisements may not advertise the price
or payment terms of a vehicle and shall disclose that the advertiser
is an autobroker or auto buying service, and shall clearly and
conspicuously state the following: “All new cars arranged for sale
are subject to price and availability from the selling franchised
new car dealer.”

(B) As to printed advertisements, the disclosure statement
required by subparagraph (A) shall be printed in not less than
10-point bold type size and shall be textually segregated from the
other portions of the printed advertisement.

(2) Notwithstanding subparagraph (A), classified advertisements
for autobrokering services that measure two column inches or less
are exempt from the disclosure statement in subparagraph (A)
pertaining to price and availability.

(3) Radio advertisements of a duration of less than 11 seconds
that do not reference specific line-makes or models of motor
vehicles are exempt from the disclosure statement required in
subparagraph (A).

(c) Fail, within 48 hours, to withdraw in writing an
advertisement of a vehicle that has been sold or withdrawn from
sale.

(d) Advertise or represent a vehicle as a new vehicle if the
vehicle is a used vehicle.

(e) Engage in the business for which the licensee is licensed
without having in force and effect a bond as required by this article.

(f) Engage in the business for which the dealer is licensed
without at all times maintaining an established place of business
as required by this code.

(g) Include, as an added cost to the selling price of a vehicle,
an amount for licensing or transfer of title of the vehicle, which is
not due to the state unless, prior to the sale, that amount has been
paid by a dealer to the state in order to avoid penalties that would
have accrued because of late payment of the fees. However, a
dealer may collect from the second purchaser of a vehicle a
prorated fee based upon the number of months remaining in the
registration year for that vehicle, if the vehicle had been previously
sold by the dealer and the sale was subsequently rescinded and all
the fees that were paid, as required by this code and Chapter 2
(commencing with Section 10751) of Part 5 of Division 2 of the
Revenue and Taxation Code, were returned to the first purchaser
of the vehicle.

(h) Employ a person as a salesperson who has not been licensed
pursuant to Article 2 (commencing with Section 11800), and whose
license is not displayed on the premises of the dealer as required
by Section 11812, or willfully fail to notify the department by mail
within 10 days of the employment or termination of employment
of a salesperson.

(i) Deliver, following the sale, a vehicle for operation on
California highways, if the vehicle does not meet all of the
equipment requirements of Division 12 (commencing with Section
24000). This subdivision does not apply to the sale of a leased
vehicle to the lessee if the lessee is in possession of the vehicle
immediately prior to the time of the sale and the vehicle is
registered in this state.

(j) Use, or permit the use of, the special plates assigned to him
or her for any purpose other than as permitted by Section 11715.

(k) Advertise or otherwise represent, or knowingly allow to be
advertised or represented on behalf of, or at the place of business
of, the licenseholder that no downpayment is required in connection
with the sale of a vehicle when a downpayment is in fact required
and the buyer is advised or induced to finance the downpayment
by a loan in addition to any other loan financing the remainder of
the purchase price of the vehicle. The terms “no downpayment,”
“zero down delivers,” or similar terms shall not be advertised
unless the vehicle will be sold to a qualified purchaser without a
prior payment of any kind or trade-in.

(l) Participate in the sale of a vehicle required to be reported to
the Department of Motor Vehicles under Section 5900 or 5901
without making the return and payment of the full sales tax due
and required by Section 6451 of the Revenue and Taxation Code.

(m) Permit the use of the dealer’s license, supplies, or books by
any other person for the purpose of permitting that person to engage
in the purchase or sale of vehicles required to be registered under
this code, or permit the use of the dealer’s license, supplies, or
books to operate a branch location to be used by any other person,
whether or not the licensee has any financial or equitable interest
or investment in the vehicles purchased or sold by, or the business
of, or branch location used by, the other person.

(n) Violate any provision of Article 10 (commencing with
Section 28050) of Chapter 5 of Division 12.

(o) Sell a previously unregistered vehicle without disclosing in
writing to the purchaser the date on which a manufacturer’s or
distributor’s warranty commenced.

(p) Accept a purchase deposit relative to the sale of a vehicle,
unless the vehicle is present at the premises of the dealer or
available to the dealer directly from the manufacturer or distributor
of the vehicle at the time the dealer accepts the deposit. Purchase
deposits accepted by an autobroker when brokering a retail sale
shall be governed by Sections 11736 and 11737.

(q) Consign for sale to another dealer a new vehicle.

(r) Display a vehicle for sale at a location other than an
established place of business authorized by the department for that
dealer or display a new motor vehicle at the business premises of
another dealer registered as an autobroker. This subdivision does
not apply to the display of a vehicle pursuant to subdivision (b) of
Section 11709 or the demonstration of the qualities of a motor
vehicle by way of a test drive.

(s) Use a picture in connection with an advertisement of the
price of a specific vehicle or class of vehicles, unless the picture
is of the year, begin delete make end delete begin insert make, end insert and model being offered for sale. The
picture shall not depict a vehicle with optional equipment or a
design not actually offered at the advertised price.

(t) Advertise begin insert for sale end insert a vehicle begin delete for sale end delete that was used by the
selling licensee in its business as a demonstrator, executive vehicle,
service vehicle, rental, loaner, or lease vehicle, unless the
advertisement clearly and conspicuously discloses the previous
use made by that licensee of the vehicle. An advertisement shall
not describe any of those vehicles as “new.”

(u)  Advertise the prior use or ownership history of a vehicle in
an inaccurate manner.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 11713.1 of the end insert begin insert Vehicle Code end insert begin insert is amended to
read: end insert

11713.1.  

It is a violation of this code for the holder of a dealer’s
license issued under this article to do any of the following:

(a) Advertise a specific vehicle for sale without identifying the
vehicle by its model, model-year, and either its license number or
that portion of the vehicle identification number that distinguishes
the vehicle from all other vehicles of the same make, model, and
model-year. Model-year is not required to be advertised for current
model-year vehicles. Year models are no longer current when
ensuing year models are available for purchase at retail in
California. An advertisement that offers for sale a class of new
vehicles in a dealer’s inventory, consisting of five or more vehicles,
that are all of the same make, model, and model-year is not required
to include in the advertisement the vehicle identification numbers
or license numbers of those vehicles.

(b) Advertise the total price of a vehicle without including all
costs to the purchaser at time of sale, except taxes, vehicle
registration fees, the California tire fee, as defined in Section 42885
of the Public Resources Code, emission testing charges not
exceeding fifty dollars ($50), actual fees charged for certificates
pursuant to Section 44060 of the Health and Safety Code, finance
charges, and any dealer document processing charge or charge to
electronically register or transfer the vehicle.

(c) (1) Exclude from an advertisement of a vehicle for sale that
there will be added to the advertised total price at the time of sale,
charges for sales tax, vehicle registration fees, the California tire
fee, the fee charged by the state for the issuance of a certificate of
compliance or noncompliance pursuant to a statute, finance
charges, a charge to electronically register or transfer the vehicle,
and a dealer document processing charge.

(2) The obligations imposed by paragraph (1) are satisfied by
adding to the advertisement a statement containing no abbreviations
and that is worded in substantially the following form: “Plus
government fees and taxes, any finance charges, any dealer
document processing charge, any electronic filing charge, and any
emission testing charge.”

(3) For purposes of paragraph (1), “advertisement” means an
advertisement in a newspaper, magazine, or direct mail publication
that is two or more columns in width or one column in width and
more than seven inches in length, or on a Web page of a dealer’s
Internet Web site that displays the price of a vehicle offered for
sale on the Internet, as that term is defined in paragraph (6) of
subdivision (f) of Section 17538 of the Business and Professions
Code.

(d) Represent the dealer document processing charge, electronic
registration or transfer charge, or emission testing charge, as a
governmental fee.

(e) Fail to sell a vehicle to a person at the advertised total price,
exclusive of taxes, vehicle registration fees, the California tire fee,
the fee charged by the state for the issuance of a certificate of
compliance or noncompliance pursuant to a statute, finance
charges, mobilehome escrow fees, the amount of a city, county,
or city and county imposed fee or tax for a mobilehome, a dealer
document processing charge, an electronic registration or transfer
charge, and a charge for emission testing not to exceed fifty dollars
($50) plus the actual fees charged for certificates pursuant to
Section 44060 of the Health and Safety Code, while the vehicle
remains unsold, unless the advertisement states the advertised total
price is good only for a specified time and the time has elapsed.
Advertised vehicles shall be sold at or below the advertised total
price, with statutorily permitted exclusions, regardless of whether
the purchaser has knowledge of the advertised total price.

(f) (1) Advertise for sale, sell, or purchase for resale a new
vehicle of a line-make for which the dealer does not hold a
franchise.

(2) This subdivision does not apply to a transaction involving
the following:

(A) A mobilehome.

(B) A recreational vehicle as defined in Section 18010 of the
Health and Safety Code.

(C) A commercial coach, as defined in Section 18001.8 of the
Health and Safety Code.

(D) An off-highway motor vehicle subject to identification as
defined in Section 38012.

(E) A manufactured home.

(F) A new vehicle that will be substantially altered or modified
by a converter prior to resale.

(G) A commercial vehicle with a gross vehicle weight rating of
more than 10,000 pounds.

(H) A vehicle purchased for export and exported outside the
territorial limits of the United States without being registered with
the department.

(I) A vehicle acquired in the ordinary course of business as a
new vehicle by a dealer franchised to sell that vehicle, if all of the
following apply:

(i) The manufacturer or distributor of the vehicle files a
bankruptcy petition.

(ii) The franchise agreement of the dealer is terminated,
canceled, or rejected by the manufacturer or distributor as part of
the bankruptcy proceedings and the termination, cancellation, or
rejection is not a result of the revocation by the department of the
dealer’s license or the dealer’s conviction of a crime.

(iii) The vehicle is held in the inventory of the dealer on the
date the bankruptcy petition is filed.

(iv) The vehicle is sold by the dealer within six months of the
date the bankruptcy petition is filed.

(3) Subparagraph (I) of paragraph (2) does not entitle a dealer
whose franchise agreement has been terminated, canceled, or
rejected to continue to perform warranty service repairs or continue
to be eligible to offer or receive consumer or dealer incentives
offered by the manufacturer or distributor.

(g) Sell a park trailer, as specified in Section 18009.3 of the
Health and Safety Code, without disclosing in writing to the
purchaser that a park trailer is required to be moved by a transporter
or a licensed manufacturer or dealer under a permit issued by the
Department of Transportation or a local authority with respect to
highways under their respective jurisdictions.

(h) Advertise free merchandise, gifts, or services provided by
a dealer contingent on the purchase of a vehicle. “Free” includes
merchandise or services offered for sale at a price less than the
seller’s cost of the merchandise or services.

(i) (1) Advertise vehicles, and related goods or services, at a
specified dealer price, with the intent not to supply reasonably
expectable demand, unless the advertisement discloses the number
of vehicles in stock at the advertised price. In addition, whether
or not there are sufficient vehicles in stock to supply a reasonably
expectable demand, when phrases such as “starting at,” “from,”
“beginning as low as,” or words of similar import are used in
reference to an advertised price, the advertisement shall disclose
the number of vehicles available at that advertised price.

(2) For purposes of this subdivision, in a newspaper
advertisement for a vehicle that is two model-years old or newer,
the actual phrase that states the number of vehicles in stock at the
advertised price shall be printed in a type size that is at least equal
to one-quarter of the type size, and in the same style and color of
type, used for the advertised price. However, in no case shall the
phrase be printed in less than 8-point type size, and the phrase
shall be disclosed immediately above, below, or beside the
advertised price without intervening words, pictures, marks, or
symbols.

(3) The disclosure required by this subdivision is in addition to
any other disclosure required by this code or any regulation
regarding identifying vehicles advertised for sale.

(j) Use “rebate” or similar words, including, but not limited to,
“cash back,” in advertising the sale of a vehicle unless the rebate
is expressed in a specific dollar amount and is in fact a rebate
offered by the vehicle manufacturer or distributor begin insert , a finance
company affiliated with a vehicle manufacturer or distributor, a
regulated utility, or a government entity end insert directly to the retail
purchaser of the vehicle or to the assignee of the retail purchaser.

(k) Require a person to pay a higher price for a vehicle and
related goods or services for receiving advertised credit terms than
the cash price the same person would have to pay to purchase the
same vehicle and related goods or services. For the purpose of this
subdivision, “cash price” has the meaning as defined in subdivision
(e) of Section 2981 of the Civil Code.

(l) Advertise a guaranteed trade-in allowance.

(m) Misrepresent the authority of a salesperson, representative,
or agent to negotiate the final terms of a transaction.

(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
or similar terms that refer to a dealer’s cost for a vehicle in an
advertisement for the sale of a vehicle or advertise that the selling
price of a vehicle is above, below, or at either of the following:

(A) The manufacturer’s or distributor’s invoice price to a dealer.

(B) A dealer’s cost.

(2) This subdivision does not apply to either of the following:

(A) A communication occurring during face-to-face negotiations
for the purchase of a specific vehicle if the prospective purchaser
initiates a discussion of the vehicle’s invoice price or the dealer’s
cost for that vehicle.

(B) A communication between a dealer and a prospective
commercial purchaser that is not disseminated to the general public.
For purposes of this subparagraph, a “commercial purchaser”
means a dealer, lessor, lessor-retailer, manufacturer,
remanufacturer, distributor, financial institution, governmental
entity, or person who purchases 10 or more vehicles during a year.

(o) Violate a law prohibiting bait and switch advertising,
including, but not limited to, the guides against bait advertising
set forth in Part 238 (commencing with Section 238) of Title 16
of the Code of Federal Regulations, as those regulations read on
January 1, 1988.

(p) Make an untrue or misleading statement indicating that a
vehicle is equipped with all the factory-installed optional equipment
the manufacturer offers, including, but not limited to, a false
statement that a vehicle is “fully factory equipped.”

(q) Affix on a new vehicle a supplemental price sticker
containing a price that represents the dealer’s asking price that
exceeds the manufacturer’s suggested retail price unless all of the
following occur:

(1) The supplemental sticker clearly and conspicuously discloses
in the largest print appearing on the sticker, other than the print
size used for the dealer’s name, that the supplemental sticker price
is the dealer’s asking price, or words of similar import, and that it
is not the manufacturer’s suggested retail price.

(2) The supplemental sticker clearly and conspicuously discloses
the manufacturer’s suggested retail price.

(3) The supplemental sticker lists each item that is not included
in the manufacturer’s suggested retail price, and discloses the
additional price of each item. If the supplemental sticker price is
greater than the sum of the manufacturer’s suggested retail price
and the price of the items added by the dealer, the supplemental
sticker price shall set forth that difference and describe it as “added
mark-up.”

(r) Advertise an underselling claim, including, but not limited
to, “we have the lowest prices” or “we will beat any dealer’s price,”
unless the dealer has conducted a recent survey showing that the
dealer sells its vehicles at lower prices than another licensee in its
trade area and maintains records to adequately substantiate the
claims. The substantiating records shall be made available to the
department upon request.

(s) (1) Advertise an incentive offered by the manufacturer or
distributor if the dealer is required to contribute to the cost of the
incentive as a condition of participating in the incentive program,
unless the dealer discloses in a clear and conspicuous manner that
dealer participation may affect consumer cost.

(2) For purposes of this subdivision, “incentive” means anything
of value offered to induce people to purchase a vehicle, including,
but not limited to, discounts, savings claims, rebates, below-market
finance rates, and free merchandise or services.

(t) Display or offer for sale a used vehicle unless there is affixed
to the vehicle the Federal Trade Commission’s Buyer’s Guide as
required by Part 455 of Title 16 of the Code of Federal Regulations.

(u) Fail to disclose in writing to the franchisor of a new motor
vehicle dealer the name of the purchaser, date of sale, and the
vehicle identification number of each new motor vehicle sold of
the line-make of that franchisor, or intentionally submit to that
franchisor a false name for the purchaser or false date for the date
of sale.

(v) Enter into a contract for the retail sale of a motor vehicle
unless the contract clearly and conspicuously discloses whether
the vehicle is being sold as a new vehicle or a used vehicle, as
defined in this code.

(w) Use a simulated check, as defined in subdivision (a) of
Section 22433 of the Business and Professions Code, in an
advertisement for the sale or lease of a vehicle.

(x) Fail to disclose, in a clear and conspicuous manner in at
least 10-point boldface type on the face of a contract for the retail
sale of a new motor vehicle that this transaction is, or is not, subject
to a fee received by an autobroker from the selling new motor
vehicle dealer, and the name of the autobroker, if applicable.

(y) Sell or lease a new motor vehicle after October 1, 2012,
unless the dealer has a contractual agreement with the department
to be a private industry partner pursuant to Section 1685. This
subdivision does not apply to the sale or lease of a motorcycle or
off-highway motor vehicle subject to identification under Section
38010 or a recreational vehicle as defined in Section 18010 of the
Health and Safety Code.

(z) As used in this section, “make” and “model” have the same
meaning as is provided in Section begin delete 565.3 end delete begin insert 565.12 end insert of Title 49 of the
Code of Federal Regulations.

begin delete

(aa) This section shall become operative on July 1, 2012.

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 11713.16 of the end insert begin insert Vehicle Code end insert begin insert is amended to
read: end insert

11713.16.  

It is a violation of this code for the holder of any
dealer’s license issued under this article to do any of the following:

(a) Advertise any used vehicle of the current or prior model-year
without expressly disclosing the vehicle as “used,” “previously
owned,” or a similar term that indicates that the vehicle is used,
as defined in this code.

(b) Use the terms “on approved credit” or “on credit approval”
in an advertisement for the sale of a vehicle unless those terms are
clearly and conspicuously disclosed and unabbreviated.

(c) Advertise an amount described by terms such as “unpaid
balance” or “balance can be financed” unless the total sale price
is clearly and conspicuously disclosed and in close proximity to
the advertised balance.

(d) Advertise credit terms that fail to comply with the disclosure
requirements of Section 226.24 of Title 12 of the Code of Federal
Regulations. Advertisements of terms that include escalated
payments, balloon payments, or deferred downpayments shall
clearly and conspicuously identify those payments as to amounts
and time due.

(e) Advertise as the total sales price of a vehicle an amount that
includes a deduction for a rebate. However, a dealer may advertise
a separate amount that includes a deduction for a rebate provided
that the advertisement clearly and conspicuously discloses, in close
proximity to the amount advertised, the price of the vehicle before
the rebate deduction and the amount of the rebate, each so
identified. begin insert A dealer may not advertise a rebate deduction that
conflicts with another advertised rebate deduction. end insert

(f) Advertise claims such as “everyone financed,” “no credit
rejected,” or similar claims unless the dealer is willing to extend
credit to any person under any and all circumstances.

(g) Advertise the amount of any downpayment unless it
represents the total payment required of a purchaser prior to
delivery of the vehicle, including any payment for sales tax or
license. Statements such as “$_____ delivers,” “$____ puts you
in a new car” are examples of advertised downpayments.

(h) Advertise the price of a new vehicle or class of new vehicles
unless the vehicle or vehicles have all of the equipment listed as
standard by the manufacturer or distributor or the dealer has
replaced the standard equipment with equipment of higher value.

(i) Fail to clearly and conspicuously disclose in an advertisement
for the sale of a vehicle any disclosure required by this code or
any qualifying term used in conjunction with advertised credit
terms. Unless otherwise provided by statute, the specific size of
disclosures or qualifying terms is not prescribed.

begin delete SEC. 2. end delete
begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.