BILL ANALYSIS �
AB 1732
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 1732 (Stone) - As Amended: April 10, 2014
SUBJECT : Vehicles: manufacturers, distributors, and dealers.
SUMMARY : Prohibits a licensed vehicle manufacturer,
transporter or dealer from advertising a vehicle's prior use or
ownership history in an inaccurate manner, and prohibits
licensed vehicle dealers from advertising two conflicting rebate
deductions or advertising using the word 'rebate' unless the
rebate is directly offered by an affiliated finance company,
regulated utility or government entity. Specifically, this
bill :
1)Prohibits a licensed vehicle manufacturer, transporter or
dealer from advertising a vehicle's prior use or ownership
history in an inaccurate manner.
2)Prohibits a licensed dealer from using the word "rebate" or
similar words, including, but not limited to, "cash back," in
advertising the sale of a vehicle unless the rebate is offered
directly to the retail purchaser by a finance company
affiliated with a vehicle manufacturer or distributor, a
regulated utility, or a government entity, as specified.
3)Prohibits a licensed dealer from advertising a rebate
deduction that conflicts with another advertised rebate
deduction.
4)Declares that no reimbursement is required pursuant to 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, changes the penalty for a crime or
infraction, or changes the definition of a crime.
5)Makes other technical or clarifying changes.
EXISTING LAW
1)Prohibits any person from acting as a dealer, remanufacturer,
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manufacturer, or transporter, as specified, without having
first been issued a license or temporary permit, as specified.
(Vehicle Code (VC) Section 11700)
2)Requires every manufacturer, manufacturer branch,
remanufacturer, remanufacturer branch, distributor,
distributor branch, transporter, or dealer of vehicles of a
type subject to registration, or snowmobiles, motorcycles,
all-terrain vehicles, or trailers of a type subject to
identification, to be licensed, as specified. (VH 11701)
3)Imposes various requirements and restrictions on persons
holding a vehicle dealer's license, including restrictions on
the manner that vehicles are advertised for sale. (VH 11713)
4)Prohibits a holder of a license from, among other things,
making or disseminating any statement which is untrue or
misleading and which is known, or which by the reasonable
exercise of case should be known to be untrue or misleading,
as specified. (VC 11713(a))
5)Establishes the Car Buyer's Bill of Rights and prohibits a car
dealer from selling or advertising for sale a used car as
"certified" if any of the following apply:
a) The dealer knows or should have known that the odometer
has been rolled back or altered to show fewer miles than
actually driven;
b) The dealer knows or should have known that the vehicle
was reacquired by the vehicle's manufacturer or a dealer
pursuant to state or federal warranty laws;
c) The title to the vehicle has been inscribed with the
notation "Lemon Law Buyback," "manufacturer repurchase,"
"salvage," "junk," "nonrepairable," "flood," or similar
title designation required by this state or another state;
d) The vehicle has sustained damage in an impact, fire, or
flood, that after repair and prior to sale substantially
impairs the use or safety of the vehicle;
e) The dealer knows or should have known that the vehicle
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has sustained frame damage;
f) The dealer disclaims any warranties of merchantability
on the vehicle;
g) The vehicle is sold "AS IS"; or,
h) The term "certified" or any similar descriptive term is
used in any manner that is untrue or misleading or that
would cause any advertisement to be in violation of the
provisions prohibiting a car dealer from scheming not sell
a vehicle or service at a price other than advertised in
accordance with the Vehicle Code, or the unfair competition
laws contained in the Business and Professions Code.
(Civil Code Section 11713.18.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill would make three minor
changes to vehicle advertising law: an expansion of the rebate
types a dealer may advertise, a codification of an existing
regulatory ban on misrepresentation of a used vehicle's
history, and an explicit ban on advertising two conflicting
rebates together. This bill is sponsored by the California
New Car Dealers Association.
2)Author's statement . According to the author, "AB 1732 seeks
to modernize California's advertising laws to better protect
consumers and promote fair and open markets for the sale of
all vehicles. California's advertising laws were created to
allow consumers to have a complete understanding of their
obligations when making a purchase decision on a vehicle and
to accurately compare advertisements from different dealers.
This bill seeks to clarify and update current laws to reflect
industry's best practices."
3)Changes to vehicle advertising law . According to the sponsor,
this bill is intended to work three distinct changes in
vehicle advertising law.
First, this bill would alter the requirement that dealers only
advertise manufacturer or distributor's rebates by authorizing
car dealers to advertise rebates offered by a finance company
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affiliated with the manufacturer or distributor, a regulated
utility or a government entity as well. This change is
intended to permit dealers to advertise other rebate programs
such as the 'Clean Vehicle Rebate Program' or 'Cash for
Clunkers'.
Second, this bill would codify existing regulations that overtly
require that express advertisements of a vehicle's prior use
or ownership history must be accurate. The sponsor states
that this particular regulation is largely unknown and that
its codification would help ensure compliance.
Third, this bill would clarify that a dealer may not advertise a
rebate deduction if it conflicts with another advertised
deduction. The sponsor states that this change is necessary
because of confusion among dealers and law enforcement as to
how a conflicting rebate would be enforced.
4)Arguments in support . The California New Car Dealers
Association (CNCDA) write, "California's vehicle advertising
laws were created to allow consumers to have a complete
understanding of their obligations when making a vehicle
purchase or lease decision and to accurately compare
advertisements from different dealers. These laws have not
been updated since 2002 and over the past decade advertising
on the Internet has exploded. Digital advertising now
eclipses both television and print advertising, exceeding 36
percent of all dealership ads, and representing over $330
million in direct contributions to California's economy.
AB 1732 is an effort to clarify and modernize various dealer
advertising laws?We have been working with the Department of
Motor Vehicles, law enforcement entities and other
stakeholders to clarify the rules for the 21st Century and AB
1732 reflects those stakeholder discussions and the industry's
best practices".
5)Related legislation . SB 686 (Jackson) of 2013 would prohibit a
vehicle dealer from selling, leasing, renting, loaning, or
otherwise transferring ownership of a used vehicle if the
dealer knows or should have known that the vehicle is subject
to an manufacturer's safety recall, and place similar
restrictions on the sale or transfer of ownership of a used
vehicle by a rental car company that is also a licensed
dealer. This bill is currently pending in this Committee.
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6)Previous legislation . AB 964 (Bonta) of 2013 would amend the
existing Car Buyer's Bill of Rights to prohibit the
advertising or selling of a used vehicle as "certified" if the
dealer knows or should have known that the vehicle is subject
to a manufacturer's safety recall. This bill died on the
inactive file in the Assembly.
AB 68 (Monta�ez), Chapter 128, Statutes of 2005, enacts the
Car Buyer's Bill of Rights, provided that a car dealer may not
advertise of sell as "certified" a used or pre-owned motor
vehicle, as defined, unless specified conditions are
satisfied, and further provided that vehicles sold as
"certified" may not be sold "as is," or if the dealer has
disclaimed any warranties.
REGISTERED SUPPORT / OPPOSITION :
Support
California New Car Dealers Association (sponsor)
Opposition
None on file.
Analysis Prepared by : Hank Dempsey / B.,P. & C.P. / (916)
319-3301