Amended in Senate May 5, 2014

Amended in Senate April 9, 2014

Amended in Senate March 24, 2014

Senate Bill No. 962

Introduced by Senator Leno

(Coauthors: Senators Hancock, Pavley, and Wolk)

(Principal coauthor: Assembly Member Skinner)

February 6, 2014

An act to add Section 22761 to the Business and Professions Code, relating to mobile communications devices.

LEGISLATIVE COUNSEL’S DIGEST

SB 962, as amended, Leno. Advanced mobile communications devices.

Existing law regulates various business activities and practices, including the sale of telephones.

This bill would require that any advanced mobile communications device, begin delete as defined end delete begin insert commonly known as a smartphone end insert , that is begin insert manufactured and end insert sold in California on or after begin delete January end delete begin insert July end insert 1, 2015, include a technological solution, which may consist of software, hardware, or both software and hardware, that can render inoperable the essential features of the device, as defined, begin insert to an unauthorized user end insert when the device is not in the possession of the rightful owner. The bill would require that the technological solution be able to withstand a hard reset, as defined, and when enabled, prevent reactivation of the device on a wireless network except by the rightful owner or his or her authorized designee. The bill would make these requirements inapplicable when the device is resold in California on the secondhand market or is consigned and held as collateral on a loan. The bill would prohibit the sale of an advanced mobile communications device in California begin delete without the technological solution being enabled, but end delete begin insert unless, during the activation and registration process, the device’s default setting prompts the user to enable the technological solution. The bill end insert would authorize the rightful owner to affirmatively elect to disable the technological solution begin delete after sale. end delete begin insert at the point of sale, during the activation and registration process, or anytime thereafter. end insert The bill would make a violation of the bill’s requirements subject to a civil penalty of not less than $500, nor more than $2,500, for each violation.

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

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

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) According to the Federal Communications Commission,
smartphone thefts now account for 30 to 40 percent of robberies
in many major cities across the country. Many of these robberies
often turn violent with some resulting in the loss of life.

(b) Consumer Reports projects that 1.6 million Americans were
victimized for their smartphones in 2012.

(c) According to the New York Times, 113 smartphones are
lost or stolen every minute in the United States.

(d) According to the Office of the District Attorney for the City
and County of San Francisco, in 2012, more than 50 percent of all
robberies in San Francisco involved the theft of a mobile
communications device.

(e) Thefts of smartphones in Los Angeles increased 12 percent
in 2012, according to the Los Angeles Police Department.

(f) According to press reports, the international trafficking of
stolen smartphones by organized criminal organizations has grown
exponentially in recent years because of how profitable the trade
has become.

(g) Replacement of lost and stolen mobile communications
devices was an estimated thirty-billion-dollar ($30,000,000,000)
business in 2012 according to studies conducted by mobile
communications security experts. Additionally, industry
publications indicate that the four largest providers of commercial
mobile radio services made an estimated seven billion eight
hundred million dollars ($7,800,000,000) from theft and loss
insurance products in 2013.

(h) Technological solutions that render stolen mobile
communications devices useless already exist, but the industry has
been slow to adopt them.

(i) In order to be effective, these technological solutions need
to be ubiquitous, as thieves cannot distinguish between those
mobile communications devices that have the solutions enabled
and those that do not. As a result, the technological solution should
be able to withstand a hard reset or operating system downgrade,
and be enabled by default, with consumers being given the option
to affirmatively elect to disable this protection.

(j) Manufactures of advanced mobile communications devices
and commercial mobile radio service providers have a
responsibility to ensure their customers are not targeted as a result
of purchasing their products and services.

(k) It is the intent of the Legislature to require all smartphones
begin delete and other advanced mobile communications devices end delete offered for
sale in California to come with a technological solution enabled,
in order to deter theft and protect consumers.

SEC. 2.  

Section 22761 is added to the Business and Professions
Code, to read:

22761.  

(a) For purposes of this section, the following terms
have the following meanings:

(1) “Advanced mobile communications device” means an
electronic device that is regularly hand held when operated that
enables the user to engage in voice communications using mobile
telephony service, Voice over Internet Protocol, or Internet Protocol
enabled service, as those terms are defined in Sections 224.4 and
239 of the Public Utilities Code, and to connect to the Internet,
begin delete and includes what end delete begin insert and is limited to what end insert are commonly known as
begin delete smartphones and tablets. end delete begin insert smartphones. end insert

(2) “Commercial mobile radio service” means “commercial
mobile service,” as defined in subsection (d) of Section 332 of
Title 47 of the United States Code and as further specified by the
Federal Communications Commission in Parts 20, 22, 24, and 25
of Title 47 of the Code of Federal Regulations, and includes
“mobile satellite telephone service” and “mobile telephony
service,” as those terms are defined in Section 224.4 of the Public
Utilities Code.

(3) “Essential features” of an advanced mobile communications
device include the ability to use the device for voice
communications and the ability to begin delete connect to end delete begin insert browse end insert the Internet,
including the ability to access and use mobile software applications
commonly known as “apps.” begin insert “Essential features” does not include
any functionality needed for the operation of the technological
solution. end insert

(4) “Hard reset” means the restoration of an advanced mobile
communications device to the state it was in when it left the
factory, and refers to any act of returning a device to that state,
including processes commonly termed a factory reset or master
reset.

(5) “Sold in California” means that the advanced mobile
communications device is sold at retail from a location within the
state, or the advanced mobile communications device is sold and
shipped to an end-use consumer at an address within the state.
“Sold in California” does not include a device that is resold in the
state on the secondhand market or that is consigned and held as
collateral on a loan.

(b) (1) Any advanced mobile communications device that is
begin insert manufactured and end insert sold in California on or after begin delete January end delete begin insert July end insert 1,
2015, shall include a technological solution that can render the
essential features of the device inoperable begin insert to an unauthorized user end insert
when the device is not in the possession of the rightful owner. The
technological solution shall be reversible, so that if the rightful
owner obtains possession of the device after the essential features
of the device have been rendered inoperable, the operation of those
essential features can be restored by the rightful owner or his or
her authorized designee. A technological solution may consist of
software, hardware, or a combination of both software and
hardware, but shall be able to withstand a hard reset, and when
enabled, shall prevent reactivation of the device on a wireless
network except by the rightful owner or his or her authorized
designee. No advanced mobile communications device may be
sold in California begin delete without the technological solution enabled. end delete
begin insert unless, during the activation and registration process, the device’s
default setting prompts the user to enable the technological
solution. end insert

(2) The “essential features” that are required to be rendered
inoperable pursuant to this subdivision do not include the ability
of a device to access emergency services by a voice call or text to
the numerals “911” and the ability of a device to receive wireless
emergency alerts and warnings.

(3) The rightful owner of an advanced mobile communications
device may affirmatively elect to disable the technological solution
begin delete after sale. end delete begin insert at the point of sale, during the activation and registration
process, or anytime thereafter. end insert However, the physical acts
necessary to disable the technological solution may only be
performed by the end-use consumer or a person specifically
selected by the end-use consumer to disable the technological
begin delete solution and shall not be physically performed by any retail seller
of the advanced mobile communications device. end delete begin insert solution. end insert

(c) A person or retail entity selling an advanced communications
device in California in violation of subdivision (b) shall be subject
to a civil penalty of not less than five hundred dollars ($500), nor
more than two thousand five hundred dollars ($2,500), per device
sold in California.

(d) Any request by a government agency to interrupt
communications service utilizing a technological solution required
by this section is subject to Section 7908 of the Public Utilities
Code.

(e) Nothing in this section requires a technological solution that
is incompatible with, or renders it impossible to comply with,
obligations under state and federal law and regulation related to
any of the following:

(1) The provision of emergency services through the 911 system,
including text to 911, bounce-back messages, and location accuracy
requirements.

(2) Participation in the wireless emergency alert system.

(3) Participation in state and local emergency alert and public
safety warning systems.