BILL ANALYSIS �
AB 2503
Page 1
Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 2503 (Hagman) - As Amended: April 23, 2014
SUBJECT : Repossessors
SUMMARY : Makes a number of minor, non-controversial changes to
the Collateral Recovery Act related to repossessors, as follows:
1)Current law makes it a misdemeanor, punishable by a fine of up
to $5,000, for any person or financial institution to
knowingly engage a nonexempt unlicensed person to repossess
collateral on its behalf.
This bill additionally applies this provision to
buy-here-pay-here dealers (i.e. a car dealer who finances
purchases in-house).
2)Current law, in case of the death of a person licensed as an
individual repossessor, authorizes a member of the immediate
family of the deceased licensee to continue the licensed
recovery agency (LRA) under the same license for 120 days
following the death, if written notice is made to the Bureau
of Security and Investigative Services (BSIS) within 30 days
of the death.
This bill increases the length of time a member of the
immediate family can continue the LRA under the same license
to 180 days and requires that the required written notice to
BSIS identify the person in charge of running the day-to-day
operations.
3)Current law authorizes a repossessor to wear a badge, cap
insignia, or jacket label if it includes specified
information. Current law additionally authorizes BSIS to
assess a $25 administrative fine for using any identification
to indicate registration as a repossessor, other than the
BSIS-issued registration card or a BSIS-approved employer
identification card issued by the LRA.
This bill exempts the use of a badge, cap insignia, or jacket
patch by a repossessor from the prohibition against using any
identification, other than as specified, to indicate
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registration as a repossessor.
4)Current law authorizes BSIS to assess a fine of $25, in
addition to any other fines authorized by law, against a
repossessor for knowingly submitting a false report to his or
her employer.
This bill authorizes BSIS to assess the fine for knowingly
submitting a false report in general, whether or not it is
made to an employer.
5)Current law requires a repossessor to notify law enforcement
within one hour after taking possession of a vehicle on behalf
of any legal owner under the terms of a security agreement or
lease agreement, and makes a violation of that provision an
infraction.
This bill increases that time to two hours and requires a
repossessor to attempt to notify law enforcement within one
hour and specifies the information to be reported.
6)Current law requires the Department of Motor Vehicles (DMV),
when a legal owner or his or her agent repossesses a vehicle
on which renewal registration fees are due, to waive any
renewal penalties that are due for late payment if the fees
are paid within 60 days of taking possession.
This bill additionally applies this provision to vehicles that
are repossessed by a licensed repossessor.
7)This bill prohibits a person from interfering with the
transport of a vehicle to a storage facility, auction, or
dealer by a repossessor once repossession is complete, and
makes a violation of that provision an infraction and deletes
obsolete provisions related to the sale of collateral.
EXISTING LAW :
1)Provides for the licensing and regulation of LRAs,
repossessors, and repossessor qualified managers by BSIS,
within the Department of Consumer Affairs.
2)Establishes the Collateral Recovery Act, which governs
collateral repossessions by a legal owner, lienholder, lessor
or lessee, or the agent of any of them based on written
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authorization and a security agreement.
FISCAL EFFECT : Unknown
COMMENTS : In order to purchase a home, vehicle, or a major
appliance, a consumer may seek out a lender to finance the deal.
A security agreement (e.g. mortgage, obligation, or lease
agreement) gives a lender a security interest in a specified
asset or property pledged as collateral. When a debtor defaults
on payments, the lender is authorized to collect and resell the
collateral to offset the delinquent amount owed by the debtor.
Under existing law, a creditor may use a collections agency to
recover loan payments in default from customers, and if that is
unsuccessful, a creditor may hire an LRA to recover-or
repossess- viable collateral for resale, with the proceeds going
towards the outstanding loan amount. A substantial portion of
repossessions involve vehicles due to their relatively high
value, the ease of resale, and the ability to repossess vehicles
without home entry or other permission since they are commonly
parked outside. According to BSIS, there are around 400 LRAs,
over 1,000 repossessors, and close to 450 repossessor qualified
managers licensed in California.
AB 2503 updates the Collateral Recovery Act to revise a number
of industry practices and provide licensees with certain new
protections, including adding new prohibitions against the use
of unlicensed repossessors, expanding prohibitions against
submitting false reports, extending the length of time an LRA
may continue after the death of the licensee, and extending the
time a repossessor has to provide notice to law enforcement
after a repossession. This bill also exempts repossessed
vehicles from certain registration requirements and penalties
and makes it an infraction to interfere with the transport of a
repossessed vehicle. The author's intent with the bill is to
provide more clarity to current codes while addressing various
issues pertaining to the activities of licensed repossession
agencies.
Double referral: This bill was also referred to the Business,
Professions, and Consumer Protection Committee, where it passed
on April 8, 2014, by a vote of 14-0.
Previous legislation : AB 791 (Hagman), Chapter 340, Statutes of
2013, authorized a repossessor to wear certain identification,
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as specified, prohibited a repossessor from selling repossessed
collateral or accepting payment from a debtor in lieu of
repossession, and prohibited a repossession agency from
disclosing personal employee information.
AB 505 (Hagman), Chapter 322, Statutes of 2009, revised the Act
and limited an LRA's liability for damages to a vehicle, allowed
the impound of any tow vehicle used to violate the Act, narrowed
the definition of lawful experience for qualified managers of
repossession agencies, and required impound agencies to accept a
valid bank credit card or cash.
SB 821 (Committee on Business, Professions and Economic
Development), Chapter 307, Statutes of 2009, required that if
more than one vehicle is repossessed, each vehicle shall be
considered and reported separately for purposes of meeting law
enforcement notification requirements.
SB 532 (Committee on Transportation), Chapter 1007, Statutes of
1999, required that the notification to law enforcement agencies
that is required whenever possession of a vehicle is taken by or
on behalf of any legal owner under the terms of a security or
lease agreement notification be made within one hour after
taking possession of the vehicle.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Licensed Repossessors (sponsor)
Opposition
None on file
Analysis Prepared by : Anya Lawler / TRANS. / (916) 319-2093