BILL ANALYSIS                                                                                                                                                                                                    Ķ

                                                                     AB 287

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          Date of Hearing:   April 21, 2015


                                  Mike Gatto, Chair

          AB 287  
          (Gordon) - As Amended March 23, 2015

          SUBJECT:  Vehicle safety:  recalls

          SUMMARY:  Enacts the Consumer Automotive Recall Safety Act  
          (Act), which requires a motor vehicle dealer or rental car  
          company to obtain a recall database report within 30 days before  
          sale or offer of a car, and generally requires the car to be  
          repaired prior to transfer or accepted by the consumer  
          unrepaired after providing informed consent.  Specifically, this  

             1)   Prohibits a dealer from displaying or offering for sale  
               a used vehicle unless the dealer has obtained a recall  
               database report within 30 days of the display of offer.  

             2)   Prohibits a dealer from selling or leasing a used  
               vehicle if the recall database report indicates the vehicle  
               is subject to a "Stop Sale-Stop Drive" recall until the  
               recall repair has been made.  

             3)   Prohibits a dealer from selling or leasing a used  
               vehicle if the recall database report indicates the vehicle  
               is subject to a manufacturer's recall and the line make is  
               the same as the franchise of the dealer, until the recall  
               repair has been made. 


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             4)   Allows a dealer to sell or lease a used vehicle that is  
               subject to a manufacturer's recall, as specified, if the  
               vehicle is not the same line make as the franchise of the  
               dealer if the following conditions are satisfied: 

               a)     The dealer provides the recall database report to  
                 the consumer disclosing the manufacturer's  recall prior  
                 to sale or lease; and,

               b)     The consumer signs a disclosure agreement  
                 acknowledging the manufacturer's recall, and that the  
                 consumer can get the recall repaired at no cost to the  
                 consumer at a new motor vehicle dealer of the vehicle's  
                 line make. 

             5)   Specifies that a recall database report and the  
               disclosure agreement provided and signed by the consumer  
               are to be provided separate from the conditional sales  
               contract or other vehicle purchase agreement.  

             6)   Prohibits a rental car company from renting a vehicle  
               unless the company has obtained a recall database report  
               within 30 days of the offer.

             7)   Prohibits a rental car company from renting a vehicle if  
               the recall database report indicates the vehicle is subject  
               to a "Stop Sale-Stop Drive" recall until the recall repair  
               has been made.  

             8)    Allows a rental car company to rent a vehicle that is  
               subject to a manufacturer's recall, as specified, if the  
               following conditions are satisfied: 

               a)     The rental car company discloses the recall database  
                 report to the consumer disclosing the manufacturer's   
                 recall prior to rental; and,

               b)     The consumer signs a disclosure agreement  


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                 acknowledging the manufacturer's recall, as specified. 

             9)   Requires the seller of a motor vehicle, including  
               private party sales, to disclose all recalls related to the  
               vehicle being sold and requires the buyer to provide an  
               acknowledgement form to the Department of Motor Vehicles  
               (DMV) indicating the buyer has received all recall  
               information in order to transfer vehicle registration, as  
               specified, and authorizes the DMV to refuse transfer or  
               registration without that acknowledgement. 

             10)  Requires a vehicle manufacturer to clearly and  
               conspicuously display all recall notifications on its  

             11)  Requires a vehicle manufacturer to provide, upon  
               request, a consumer seeking to repair a recalled vehicle a  
               rental or loaner vehicle at no cost until the parts and/or  
               procedures become available, as specified.  

             12)  Requires a vehicle manufacturer to adequately and fairly  
               compensate a dealer for costs associated with providing a  
               rental or loaner vehicle and storing a recalled vehicle  
               waiting to be repaired, as specified.  

             13)  Provides that a dealer, rental car company, or private  
               seller are not legally responsible for any errors,  
               inaccuracies or omissions contained in the recall database  
               report, nor do such parties have any legal duty to provide  
               information added to a recall database after the dealer,  
               franchisee, rental car company, or private seller obtained  
               the required recall database report.

             14)  Establishes a claims and appeals process, as specified,  
               between vehicle dealers and manufacturers regarding payment  
               requirements and obligations identified in the Act.   

             15)  Directs the DMV's New Motor Vehicle Board (Board) to  
               hear and decide on disputes between vehicle dealers and  


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               manufacturers related to the Act's payment requirements and  

             16)  Authorizes the DMV to refuse to accept  the initial,  
               renewal, or transfer of a vehicle registration if the buyer  
               fails to provide the DMV with a recall disclosure statement  
               as specified in the Act. 

             17)  Proclaims that it is unlawful and a misdemeanor  
               violation for a manufacturer, as specified, to unfairly  
               discriminate against a dealer based on certain provisions  
               specified in the Act.  

             18)  Defines the terms "dealer," "manufacturer's recall,"  
               "new motor vehicle dealer," "recall database," "recall  
               database report," "rental car company," "Stop Sale - Stop  
               Drive recall," and "vehicle manufacturer."

             19)  Declares that the consumer-related provisions of this  
               bill are severable.

             20)  Excludes recreational vehicles, motorcycles, off-highway  
               motor vehicles, vehicles sold by a salvage pool, and  
               non-repairable vehicles as excluded from the provisions of  
               this bill, as specified. 

             21)  Declares that the consumer-related provisions of this  
               bill shall become operable as of July 1, 2016, as  

             22)  Makes legislative findings and declarations pertaining  
               to the increasing number of vehicle recalls, the safety and  
               economic impacts associated with vehicle recalls, and the  
               importance of reimbursing auto dealers for the costs  
               associated with recalls.  

             23)  Makes other technical or non-substantive amendments.

             24)  Declares that no reimbursement is required by this bill  


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               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, or changes the definition of a crime.

          EXISTING LAW: 

          1)Prohibits any person from acting as a dealer, remanufacturer,  
            manufacturer, or transporter, as specified, without having  
            first been issued a license or temporary permit, as specified.  
             (Vehicle Code (VC) Section 11700)

          2)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 care should be known, to be untrue or misleading,  
            as specified.  (VC 11713(a))

          3)Establishes the Car Buyer's Bill of Rights and prohibits a car  
            dealer from selling or advertising for sale a used car as  
            "certified" under certain conditions, including if 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, or if 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 to sell a vehicle or service at a price other than  
            advertised in accordance with the VC, or the unfair  
            competition laws contained in the Business and Professions  
            Code.  (VC 11713.18.)

          4)Prohibits a dealer or person holding a retail seller's permit  
            from selling a new or used vehicle that is not in compliance  
            with the VC and departmental regulations, unless the vehicle  


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            is sold to another dealer, sold for the purpose of being  
            legally wrecked or dismantled, or sold exclusively for  
            off-highway use, as specified.  (VC 24007 (a)(1))

          5)Provides that when a federal motor vehicle standard is  
            established under federal law, as specified, no dealer shall  
            sell or offer for sale a vehicle to which the standard is  
            applicable, and no person shall sell or offer an item of  
            equipment for sale for use upon a vehicle to which the  
            standard is applicable unless:  (a) the vehicle conforms to  
            the applicable federal standard; or (b) the vehicle or  
            equipment bears a certification, as specified.  (VC 24011)

          6)Establishes the Board within DMV and requires the Board to  
            hear and decide on certain appeals and protests presented by a  
            motor vehicle franchisee pertaining to a dispute with a  
            vehicle manufacturer.  (VC 3050)

          7)Establishes the Moving Ahead for Progress in the 21st Century  
            Act (MAP-21), and requires the Secretary of the United States  
            Department of Transportation (U.S. DOT) to promulgate  
            regulations by July 6, 2013, requiring motor vehicle safety  
            recall information to be publicly available online and  
            searchable by vehicle make, model, and Vehicle Identification  
            Number (VIN).  (Public Law 112-141, 112th Congress, Section  

          8)Sets forth in federal regulations the requirements for when  
            manufacturers must notify vehicle owners, dealers, and  
            distributors about a defect that relates to motor vehicle  
            safety or noncompliance with a federal motor vehicle safety  
            standard.  (49 Code of Federal Regulations 577.1 et seq.)  
          FISCAL EFFECT:  Unknown



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           1)Purpose of this bill  .  This bill is intended to provide a  
            comprehensive solution to the dangers of recalled automobiles  
            by requiring used car dealers and rental car companies to  
            check for outstanding recalls, and then either repair the car  
            before transfer, if the car is the same line make as the  
            dealer or if the defect is particularly dangerous, or allow  
            the consumer to provide informed consent and take the  
            unrepaired car if it is a different line make or a rental car.  
             Supporters generally argue that this bill improves consumer  
            protection by taking the most dangerous cars off the road  
            while increasing consumer awareness, while opponents claim the  
            bill misleads consumers about the dangers of the remaining  
            automobiles while shifting other burdens and risks onto the  
            consumer.  AB 287 is sponsored by the California New Car  
            Dealers Association.

           2)Author's statement  .  According to the author, "Federal  
            regulations now require most vehicle manufacturers to provide  
            recall information applicable to the vehicles they manufacture  
            on the Internet and available to the public.  While federal  
            law prohibits the sale of a new vehicle subject to a recall,  
            neither federal nor California law addresses used vehicles  
            subject to a recall.  Unfortunately, studies have shown that  
            about one-third of all recalled vehicles are never repaired by  
            the vehicle's owner? 

          "AB 287, the Consumer Automotive Recall Safety Act (CARS Act)  
            would help address problems related to the sale, lease or  
            rental of used cars subject to recall in [the following ways]:  
             AB 287 would require auto manufacturers to conspicuously  
            display on their website and in all recall notifications to  
            consumers when a vehicle is subject to a Stop Drive/Stop Sale  
            recall.  AB 287 would prohibit new car dealers, used car  
            dealers, and rental car companies from selling, leasing, or  
            renting any used car in California subject to a Stop  
            Drive/Stop Sale recall.  For recalls not designated as Stop  
            Drive/Stop Sale by either NHTSA or the auto manufacturer, AB  


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            287 would require new and used car dealers and rental car  
            companies to check a qualified recall database within 30 days  
            prior to selling, leasing or renting any used vehicle to  
            consumers.  For all used vehicle sales, if a vehicle is of the  
            same line make as a dealer's franchise, AB 287 would prohibit  
            new car dealers from selling/leasing a vehicle at retail until  
            the recall issue is repaired.

          "For recalls not designated as Stop Drive/Stop Sale: If a  
            vehicle is not of the same line make as the dealer's franchise  
            or the dealer does not have a franchise, AB 287 would require  
            the dealer to take the following steps prior to sale or lease  
            of a used vehicle subject to recall: Disclose the recall to  
            the consumer; Provide a copy of the recall notice to the  
            consumer; Inform the consumer that he or she can get the  
            recall repaired at no cost at a car dealer of the vehicle's  
            line make.  AB 287 would require rental car companies to  
            disclose the recall to consumers prior to renting the used  
            vehicle subject to recall and to provide a copy of the recall  
            notice to the consumer.  AB 287 would [also] require private  
            party sellers to inform potential buyers of any and all  
            recalls prior to sale, similar to the current odometer  

          "[Finally,] AB 287 would require auto manufacturers to provide  
            consumers with a loaner vehicle at their request and at no  
            cost, when consumers seek to get a recall corrected and the  
            parts or procedures are not available for repair."

           3)Understanding motor vehicle safety recalls  .  The National  
            Traffic and Motor Vehicle Safety Act  gives the U.S. DOT's  
            National Highway Traffic Safety Administration (NHTSA)  
            authority to issue motor vehicle safety standards and to  
            require manufacturers to recall vehicles that have  
            safety-related defects or do not meet federal safety  


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          Manufacturers voluntarily initiate most recalls, while others  
            may be influenced by NHTSA investigations.  If a safety defect  
            is discovered, the manufacturer must notify NHTSA, as well as  
            vehicle owners, dealers, and distributors, plan a recall  
            campaign to remedy it, send repair guidance to franchised  
            dealerships, send notices to vehicle owners, and monitor the  
            effectiveness of the recall campaign and provide to NHSTA data  
            on the status of the recall campaign.  The manufacturer is  
            required to remedy the problem at no charge to the owner (for  
            vehicles sold up to 10 years before the recall).  After a car  
            is brought to a franchised dealership for repair, the dealer  
            will perform the recall remedy and submit claims to the  
            manufacturer for reimbursement.  NHTSA is responsible for  
            monitoring the manufacturer's corrective action to ensure  
            successful completion of the recall campaign.  However, NHTSA  
            cannot require car dealers to notify potential buyers of an  
            outstanding safety defect or require that they get the defect  
            remedied prior to a sale. 

          Conversely, if NHTSA receives enough complaints and information  
            about the operation of a vehicle that it finds there is a  
            significant threat to public safety, then it can initiate a  
            mandatory recall.  NHTSA can perform an investigation with a  
            review by engineers and experts and work with the vehicle  
            manufacturer to recall vehicles.  These recalls are  
            facilitated through direct relationships between  
            manufacturers, franchised dealerships, and owners who  
            purchased the new vehicles.  According to NHTSA, from 2000 to  
            2011, all safety defect recalls for passenger vehicles were  
            conducted voluntarily by manufacturers, although some of those  
            recalls were based on NHTSA's investigations of safety  

          The process of alerting owners of used vehicles is more  
            difficult because the vehicles may have changed hands several  
            times, and manufacturers may not have established  
            communications with used vehicle dealers who buy and sell  
            multiple different types of cars.


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           4)GAO report finds lack of recall information for used cars a  
            "significant risk."   According to a June 2011 U.S. Government  
            Accountability Office (GAO) report that examined the federal  
            safety recall process, "NHTSA cannot require used-car dealers  
            (or franchised dealerships that sell used vehicles) to notify  
            potential buyers of an outstanding safety defect or require  
            that they get the defect remedied prior to sale."  The report  
            pointed out that, with 35 million used cars sold in used and  
            franchised dealerships in 2009 alone, unknown recalls "could  
            pose a significant risk to the safety of millions of vehicle  
            drivers and may have a negative impact on recall completion  
            rates."  It adds, "NHTSA also currently lacks the authority to  
            require manufacturers to notify used-car dealerships - which  
            sold 11 million cars in 2009 - of recalls or require these  
            dealerships to notify potential buyers of an outstanding  
            recall.  As a result, many consumers may be unknowingly  
            putting their lives at risk by purchasing a defective  

          According to a February 11, 2014, press release by  
            private-sector vehicle information provider Carfax, "[M]ore  
            than 3.5 million cars were listed for sale online with an open  
            safety recall.  Texas, California, Missouri, Florida and Ohio  
            led the nation with the most recalled cars for sale online  
            last year."

           5)Substantial number of recalls announced annually  .  According  
            to the author, "[w]hile vehicles have become safer, the number  
            of vehicles subject to a recall has grown dramatically.  Over  
            the past decade, the number of traffic-related deaths has  
            dropped significantly; however, 2014 saw a new record number  
            of recalls in the U.S. with more than 63.8 million recalls.   
            This number of recalls is more than twice as many recalls as  
            any previous year and is equivalent to roughly 25% of the  
            vehicles on the road today.  Officials predict that 2015 could  


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            see another record year, as manufacturers face potential fines  
            from federal regulators, threats of increased litigation, and  
            as the issue receives greater coverage in mainstream media."

          According to the Los Angeles Times, "[A]utomakers have issued  
            almost 20 million vehicle safety announcements so far this  
            year.  No, the world's cars aren't falling apart.  But  
            headlines and lawsuits over slow recalls have made auto  
            manufacturers more vigilant? Automakers that were slow to  
            recall defective vehicles in the past have been hit with  
            increasing large federal fines and costly product-liability  
            lawsuits.  Meanwhile, [NHTSA] faces growing congressional  
            criticism for not forcing car companies to recall vehicles  
            quickly."  ("Auto recalls speed up, are on track to break a  
            record," May 15, 2014, Los Angeles Times)

          The sponsor, the California New Car Dealers Association (CNCDA),  
            notes that the pace of recalls continues to grow: "In 2014,  
            63.8 million vehicle recalls were issued in the United States,  
            more than two times the number of recalls issued in any  
            previous year.   [NHTSA] expects an even higher number of  
            recalls to be issued this year as auto manufacturers respond  
            to threats of increased litigation and fines and potential  
            damage to their reputations.  If true this means that nearly  
            50% of all vehicles on the road in California and throughout  
            the nation will have been recalled in less than two years."

           6)Improvements in accessing recall information  .  According to a  
            June 25, 2013, letter from NHTSA, "An auto dealer (or any  
            vehicle owner) today may easily access up-to-date, VIN  
            [vehicle identification number]-specific information regarding  
            the safety recall status of a used car.  Such information may  
            be accessed through the manufacturer's publicly accessible  
            VIN-look up website, through a commercial VIN-look up service  
            for registered owners, or through the manufacturer's toll-free  


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          In 2012, Congress enacted the MAP-21 Act, a funding and  
            authorization bill to govern federal transportation spending  
            that contains a provision requiring motor vehicle safety  
            recall information about outstanding recalls to be posted  
            online in a format that preserves consumer privacy and is  
            searchable by vehicle make, model, and VIN.  The MAP-21 Act  
            required U.S. DOT to promulgate regulations by July 6, 2013,  
            requiring each vehicle manufacturer to provide vehicle recall  
            information on a public website and to car dealers.    

          On August 14, 2013, NHTSA issued a final rule that will require  
            all major manufacturers (those who produce more than 25,000  
            vehicles per year) to provide the public with online access to  
            recall information searchable by VIN and without requiring  
                                    additional information to allow consumers to instantly  
            determine whether action is required to address an uncompleted  
            safety recall.  This information will be required to be  
            updated at least weekly.  While many automakers already make  
            this information available, those who do not will be required  
            to comply by August 14, 2014. 

           7)Understanding what constitutes a "recall.  "  According to  
            NHTSA, the Act defines motor vehicle safety as "the  
            performance of a motor vehicle or motor vehicle equipment in a  
            way that protects the public against unreasonable risk of  
            accidents occurring because of the design, construction, or  
            performance of a motor vehicle, and against unreasonable risk  
            of death or injury in an accident, and includes nonoperational  
            safety of a motor vehicle."  A defect includes "any defect in  
            performance, construction, a component, or material of a motor  
            vehicle or motor vehicle equipment."  Generally, a safety  
            defect is defined as a problem that exists in a motor vehicle  
            or item of motor vehicle equipment that poses a risk to motor  
            vehicle safety, and may exist in a group of vehicles of the  
            same design or manufacture, or items of equipment of the same  
            type and manufacture.


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          According to the 2011 GAO report, there are two types of safety  
            recalls.  Compliance recalls occur when vehicles or vehicle  
            equipment is determined to be noncompliant with applicable  
            federal safety standards, as identified by NHTSA or a  
            manufacturer.  Compliance recalls range from design issues  
            with seatbelts to improper placement of warning labels for  
            airbags, and from 2000 to 2009, accounted for 18% of vehicle  

          The other 82% of recalls were safety defect recalls, which occur  
            when a defect in a vehicle creates an unreasonable safety risk  
            as determined by NHTSA or a manufacturer.  Examples may  
            include problems with ignition switches, steering components,  
            fuel systems, accelerator controls, air bags, wiring or child  
            safety seats, among other things, that have the potential to  
            cause harm or increase the risk of a crash.  NHTSA also  
            provides a partial list of what would not constitute a  
            safety-related defect: air conditioners and radios that do not  
            operate properly, ordinary wear of equipment that must be  
            periodically maintained or repaired, nonstructural rust, paint  
            or cosmetic blemishes, and excessive oil consumption.

          This bill makes a distinction between the standard "manufacturer  
            recall" (excluding service campaigns and emission recalls) and  
            a "Stop Sale - Stop Drive" recall, where the vehicle  
            manufacturer or NHTSA informs the dealer to stop the sale of  
            the vehicle or provides precaution advice to the owner to stop  
            operating the vehicle.  According to CNCDA, Stop Drive, Stop  
            Sale recalls comprise about 6% to 8% of all safety recalls and  
            represent the most serious threat to the safety of the  
            motoring public.  Consumers for Auto Reliability and Safety  
            (CARS) differs in this view, stating that this distinction is  
            subjective and made by the manufacturer, and used only in  
            extreme cases (approximately 1% of all recalls).  

           8)This bill in practice  .  As noted above, the primary provisions  
            of this bill are the requirements that all used car dealers  
            and rental car companies check the recall database at least  
            every 30 days and then either hold the car until repaired if  


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            the car is the same line make as the dealer, or sell/rent the  
            car with the consumer's informed consent if the car is a  
            rental or a different line make than the dealer.  The only  
            exception is if the vehicle is subject to a much more urgent  
            "Stop Sale-Stop Drive" recall, in which case a car may not be  
            sold or rented until repaired, regardless of the nature of the  
            company holding the car.  

          Furthermore, private parties selling a car need only get the  
            informed consent of the buyer.  Consumers seeking to repair a  
            recalled vehicle who are delayed by the lack of parts or  
            proper procedures must be provided a loaner/rental car by the  
            vehicle manufacturer.  The effective date of these provisions  
            would also be delayed by six months, becoming operational on  
            July 1, 2016.

          This bill also contains multiple provisions pertaining to the  
            franchisee/franchisor relationship between manufacturers and  
            dealers, and procedures for reimbursement and dispute  
            resolution, but as those elements of the bill are outside of  
            the jurisdiction of this Committee, they will not be discussed  
            in detail here. 
           1)Arguments in support  .  According to the sponsor, CNCDA,  
            "AB 287, the Consumer Automotive Recall Safety Act (CARS  
            Act), ?.is bipartisan, comprehensive consumer protection  
            legislation that would make California the first state in  
            the nation to comprehensively address recalls of used  

          "California already has the strongest consumer protection  
            laws in the country for car buyers, but neither California  
            nor federal law address[es] the sale, lease or rental of a  
            recalled used vehicle.  The CARS Act would comprehensively  
            enhance California's existing consumer protections by  
            ensuring the most pressing safety issues are fixed in a  
            timely manner, improving the information made available to  
            consumers about cars subject to recall and providing  


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            consumers with access to loaner vehicles at no cost if  
            their vehicle is subject to recall and parts are not  
            available to repair the vehicle.  

          "The CARS Act improves vehicle safety and increases recall  
            disclosure to consumers when buying, leasing or renting a  
            used car subject to recalls in three important ways. 

            "[First,] [u]nlike other proposals, AB 287 applies to car  
            dealers and rental car companies to ensure that the most  
            dangerous vehicles get fixed.  Under the CARS Act, car dealers  
            and rental car companies would be prohibited from selling,  
            leasing or renting any used car in California subject to a  
            Stop Drive, Stop Sale recall. 

            "[Second,] [u]nder AB 287, franchised dealers of the same line  
            make (such as a Toyota dealer selling a used Prius) will fix  
            any and all recalls prior to sale.  For all other vehicles,  
            the CARS Act increases the disclosure requirements for car  
            dealers, rental car companies and private sellers, so  
            consumers will be made aware of recalls prior to purchase or  
            rental.  The new disclosure requirement would ensure that  
            consumers are told that a recall exists on the vehicle and  
            provide[d] a copy of the recall notice.  

            "[Third,] roughly 60% of all used cars sales in California are  
            made by private sellers, not car dealers.  If private sellers  
            are excluded from any recall consumer protection proposal then  
            unsuspecting private buyers will be left unaware of the recall  
            status of the car they wish to purchaser. The CARS Act  
            addresses this problem by ensuring private sellers provide to  
            any potential buyer notice of all recalls on the car prior to  
            sale.  This new consumer protection would operate similarly to  
            the current odometer disclosure on the certificate of  

            "AB 287 comprehensively covers sales by new car dealers, used  


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            car dealers, rental car companies and private sellers?Finally,  
            AB 287 directly addresses the biggest hurdle for most  
            consumers in getting their recalled vehicles repaired:  the  
            cost and inconvenience of being without their vehicle while  
            the recall work is being performed.?The CARS Act addresses  
            this issue by granting consumers with the ability to request a  
            loaner or rental vehicle at no cost from the automaker until  
            the recall repairs can be completed.

            "In sum, AB 287 is groundbreaking legislation that will  
            enhance California's already strong consumer protection laws  
            by leading to more recalled vehicles getting fixed and better  
            informing consumers when purchasing or renting vehicles."  

           2)Arguments in opposition  .  CARS opposes the bill on a  
            number of major grounds, which are echoed by other  
            opponents as well:
             Concerns about misleading distinctions between types of  
            safety recalls. CARS argues that the distinction between  
            manufacturer recalls and Stop Sale Stop Drive recalls  
            would lead to bad outcomes: "[T]his bill would create a  
            new, unprecedented, dangerous and misleading distinction  
            among auto safety recalls - based not on science, or any  
            federally-established standard, or on any other objective  
            criteria?.Instead, it would expressly allow dealers to  
            sell any used vehicle, no matter how imminent the threat  
            to public safety, or how many deaths and injuries the  
            safety defect has caused, or will cause, unless the auto  
            manufacturer - in its sole, subjective discretion - has  
            chosen to designate the recall as a "Stop Sale - Stop  
            Drive" recall.  This would create the false, misleading,  
            and dangerous impression that only "Stop Sale - Stop  
            Drive" safety recalls need to be addressed promptly."

            "According to a letter the Alliance of Automobile  
            Manufacturers submitted last November to [NHTSA], on  
            behalf of over a dozen leading auto manufacturers, during  
            the years 2000- 2013, only approximately 1% of recalled  


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            vehicles involved a blanket warning from the manufacturer  
            advising owners not to drive their cars. In some years, no  
            manufacturer issued such a warning.  However, that does  
            not mean that the other recalls during those years did not  
            involve safety defects that pose a serious risk to the  
            American public. In fact, during that time, the other 99%  
            of recalled vehicles during included cars with obviously  
            life-threatening safety defects, many of which did claim  
            lives and cause debilitating injuries.

            "Drawing this false distinction between 'do not drive'  
            recalls and other safety recalls would also inevitably  
            send a confusing, contradictory message to consumers,  
            telling them that, according to the state of California,  
            recalled cars are safe enough for a dealer to sell, while  
            expecting the buyers to get the recall repairs performed  

            CARS also points out that the danger of driving a  
            potentially unsafe car extends beyond that individual to  
            family, and even to strangers driving on the same roads. 

            Concerns about shifting of the disclosure and repair  
            burden to the consumer.  CARS and others argue that this  
            bill would harm consumers by burdening them with the  
            responsibility of managing or accepting most recall  
            repairs instead of imposing those costs on the dealer,  
            manufacturer or rental car company (although consumers  
            currently bear that burden under existing law).  Opponents  
            point to the finding that roughly one-third of recalled  
            vehicles are never repaired, in large part because of  
            problems with parts shortages, technician shortages,  
            insufficient numbers of dealers, and the transaction costs  
            for consumers to arrange the repairs. 

            Moreover, the disclosures required for cars sold by  
            different line make dealers or rented by rental car  
            companies are viewed as ineffective at usefully informing  
            the consumer of the risks associated with the recall.  The  


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            complexity of the transaction, the large amount of  
            paperwork written in 'technical jargon,' the lack of  
            accommodation for non-English language speakers, the  
            consumer's expectation that dealers would be prohibited by  
            the state from selling unsafe cars when most other  
            products cannot be sold once recalled, and claims by  
            dealers of multi-point inspections that don't include  
            recall checks, combine to weaken the real-world impact of  
            the disclosure required by this bill.  CARS writes, "In  
            essence, the bill would require consumers - if they do  
            happen to see the notices and actually read them - to make  
            life-or-death decisions under pressure, with little time  
            to deliberate, on the basis of incomplete information."
            Concerns that standards are lowered for rental cars.  CARS  
            contends that this bill "would be far worse than the  
            prevailing practices in the rental car industry (with the  
            exception of Rent-a-Wreck).  This bill would allow rental car  
            companies to rent approximately 99% of unsafe recalled cars to  
            consumers, regardless how unsafe the cars are, unless the  
            manufacturer has, in its sole discretion, chosen to warn its  
            customers not to drive the car, pending repairs."

            CARS points to pending federal legislation (S.2819 by Senator  
            Boxer), that would prohibit rental car companies from renting  
            or selling recalled cars to the public until the safety recall  
            repairs have been performed.  According to CARS, "the rental  
            car industry" supports the legislation, and that this bill  
            would potentially disrupt those efforts.  At the same time,  
            "all of the major rental car companies, including Enterprise,  
            Hertz, Avis, Dollar-Thrifty, and many smaller rental car  
            companies have already voluntarily adopted policies that are  
            more consumer-friendly and safety-oriented than AB 287.  For  
            years, they have been grounding recalled cars until they are  
            repaired, rather than renting or selling them to the public.  
            Therefore, AB 287 would represent a giant step backwards in  
            terms of safety."

            Additionally, the provisions of AB 287 that would require  


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            manufacturers to provide loaner or rental cars to consumers  
            while waiting for recall repairs to be completed, do not  
            require that those cars be free of recall defects.  As CARS  
            puts it, "[t]his totally defeats the entire purpose of proving  
            a loaner in the first place - to mitigate the risks to the  
            vehicle owner, their family and other passengers, and others  
            who share the roads."  Moreover, the bill fails to ensure that  
            consumers are meaningfully alerted to the fact that  
            manufacturers are required to provide loaner/rental cars upon  

            Concerns that AB 287's provisions are worse than existing law.  
             A number of opponents contend that the consumer notice and  
            consent provisions of this bill would actually reduce the  
            level of consumer protection available under existing law by  
            permitting manufacturers to make the argument, in future  
            personal injury cases, that a consumer who was injured in a  
            crash is partially at fault for the injury because he or she  
            accepted the car knowing it had an outstanding recall. 

            Representative of those concerns is Consumer Attorneys of  
            California (CAOC), which writes: "If the consumer, after being  
            advised of the recall, and signing an acknowledgement, fails  
            to take the vehicle in for the repair, defendants will argue  
            that the consumer had some responsibility in any subsequent  
            legal action involving injury or death.  While this would not  
            absolve the manufacturer of liability for the defect, it could  
            certainly reduce recovery through the legal doctrine of  
            comparative fault.  This approach is commonly seen by CAOC  
            members in recall cases, in that the manufacturer presents  
            evidence that Notice of the Recall was sent to the registered  
            owner, and the owner did not take the vehicle in for the  
            repairs. Often there is a dispute about whether the Notice was  
            received.  This bill would eliminate that dispute in those  
            instances where there was a signed acknowledgement, as  
            required by the bill.  Therefore, in every instance where a  
            consumer is harmed by the product and a legal action results,  
            the dealer will argue that the consumer was comparatively at  
            fault.  This may or may not be successful, but the litigation  


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            surrounding this issue will be expensive and drawn out,  
            harming the consumer's best chance of a fair result."   

            Furthermore, the International Association of Machinists and  
            Aerospace Workers argues that "For decades, California has had  
            a number of state laws on the books aimed at protecting used  
            car buyers from such practices, such as those that prohibit  
            dealers from violating express or implied warranties, engaging  
            in fraud (concealing a material fact), engaging in false  
            advertising, or engaging in bait-and-switch; plus, if injuries  
            or fatalities occur as a result of the dealer's malfeasance,  
            the potential of facing claims for reckless endangerment,  
            negligence or strict liability?.Unfortunately, instead of  
            improving protections for car buyers, [AB 287] would weaken  
            existing law, and give dealers who engage in these prohibited  
            practices a new 'safe harbor' under state law."

           3)Questions for the Committee and proposed amendments.   As  
            discussed above, there are a number of issues where the  
            Committee may wish to consider the amendments provided  
            below as a means to address valid concerns raised by  
            opponents and to improve the overall consumer protection  
            provided by this bill. 

          One concern is the differential treatment of used cars for  
            sale and cars for rent.  While it would be ideal if all  
            used and rental cars were held to an identical standard  
            where all cars under recall are held back from consumers  
            until repaired, the author contends that such an approach  
            would cause used car dealers to buy fewer used cars with  
            outstanding recalls, leading to an even larger number of  
            recalled cars being sold on the private market with only  
            minimal disclosure.  However, there are important  
            distinctions between the used car market and the rental  
            car market. 

          Opponents have argued that the major rental car companies  
            have already adopted voluntary policies to hold and repair  
            rental cars under recall.  Moreover, the federal  


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            legislation proposed by CARS (S.2819 by Senator Boxer)  
            would generally require rental car companies to such  
            requirements, and CARS contends that those rental car  
            companies support that legislation.  If that is true, the  
            Committee may wish to consider an amendment to delete the  
            provision authorizing rental car companies to rent  
            recalled cars with notice and consent, and instead hold  
            them to standards similar to those currently contained in  

              On page 26, strike out lines 12 through 25, and add the  

                "rent as soon as practicable but no later than 48 hours  
               after receiving notice of a recall conducted pursuant to  
               Sections 30118 to 30120, inclusive, of Title 49 of the  
               United States Code, the National Highway Traffic and Motor  
               Vehicle Safety Act (49 U.S.C. Sec. 30101, et seq.).
               (b) If a notification indicates that the remedy for the  
               recall is not immediately available and specifies actions  
               to temporarily alter the vehicle that eliminate the safety  
               risk posed by the recall, the rental car company, after  
               causing the specified actions to be performed, may rent the  
               vehicle. Once the remedy for the rental vehicle becomes  
               available to the rental car company, the rental car company  
               may not rent the vehicle until the vehicle has been  
            In that same vein, if rental cars should be held to the  
            higher standard, so should the loaner and rental  
            replacement vehicles provided to consumers during recall  
            repairs to be themselves under recall at the same time.   

               On page 27, line 16, after the word "made." add "  The  
               consumer shall not be provided  with a rental or loaner  
               vehicle, as prescribed in this paragraph, subject to a  
               Stop Sale - Stop Drive recall or manufacturer's  


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                                                                    Page  22

            Finally, the possibility that a 'notice and consent' regime  
            for the sale or rental of used cars could potentially erode  
            consumers' protection under existing law and their remedies in  
            the event of an accident should be taken seriously.  One  
            option suggested by CAOC would be to limit the legal effect of  
            the disclosure and acknowledgment.  The following amendments  
            would be one means to explicitly limit the admissibility of  
            the disclosure and acknowledgment, while clarifying that the  
            disclosure and acknowledgement do not reduce or otherwise  
            negatively affect a consumer's existing rights or remedies  
            under law:  

               On page 26, line 10, after the word "agreement." Add "  (f)  
               Transmission by dealers and receipt and signing by  
               consumers of the disclosures specified in subdivisions (d)  
               and (e) shall have no legal effect other than to  
               demonstrate compliance by the dealer with the requirements  
               prescribed in subdivisions (d) and (e). Nothing in this  
               article shall be interpreted to place consumers in a less  
               advantageous legal position for having received or signed  
               the disclosures provided pursuant to this chapter than if  
               no disclosure had been made."

                On page 28, line 2, after the word "11758." add "  Nothing in  
               this chapter shall affect any legal rights, claims, or  
               remedies otherwise available under law.  "

           12)Related legislation  . AB 1178 (Achadjian) would recast the  
            provisions relating to export and sale-for-resale prohibitions  
                                                                                          to prohibit taking or threaten to take any adverse action  
            against a dealer because the dealer sold or leased a vehicle  
            to a customer who either exported the vehicle to a foreign  
            country or resold the vehicle in violation of the prohibition  
            if the dealer causes the vehicle to be registered in this or  
            any other state, and collects or causes to be collected any  
            applicable sales or use tax due to this state.  AB 1178 is  


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                                                                    Page  23

            currently pending in the Assembly Transportation Committee. 

           13)Previous legislation.   SB 686 (Jackson) of 2014 would have  
            prohibited a vehicle dealer from selling a used vehicle if the  
            dealer knew or should have known that the vehicle is subject  
            to a manufacturer's safety recall and failed to correct the  
            defect.  SB 686 failed passage in the Assembly Business,  
            Professions, and Consumer Protection Committee.  

            SB 155 (Padilla) Chapter 512, Statutes of 2013, modified the  
            relationship between motor vehicle dealers and manufacturers  
            by, among other things, making changes regarding the use of  
            flat-rate time schedules for warranty reimbursement, warranty  
            and incentive claims, audits, protest rights, export policies,  
            performance standards, and facility improvements.

            AB 964 (Bonta) of 2013 would have prohibited a vehicle from  
            being advertised or sold if the dealer knows or should have  
            known that the vehicle is subject to a manufacturer's safety  
            recall, and would have required written disclosure of  
            specified problems with the vehicle.  AB 964 was held on the  
            inactive file on the Assembly Floor.

            SB 990 (Vargas) of 2012 would have allowed a car dealer  
            selling a used car to obtain data from a commercial entity,  
            rather than the federal government, to provide required  
            information to consumers on the vehicle's title history.  SB  
            990 failed passage in the Senate Transportation and Housing  

            AB 753 (Monning) of 2011 would have expressly prohibited a  
            rental car company from renting a vehicle that is subject to a  
            recall notice unless the vehicle has been repaired as  
            specified in the notice.  AB 753 failed passage in the Senate  


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                                                                    Page  24

            Appropriations Committee. 

            AB 1215 (Blumenfield), Chapter 329, Statutes of 2011, required  
            new car dealers to participate in a program to electronically  
            title and register vehicles that they sell and to post  
            specified warning notices on some used cars.

            AB 68 (Montaņez), Chapter 128, Statutes of 2005, enacted the  
            Car Buyer's Bill of Rights, which provided that a car dealer  
            may not advertise of sell as "certified" a used or pre-owned  
            motor vehicle 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.

            SB 114 (Bowen) of 2005 would have enhanced the process by  
            which attempts are made to notify an owner of a motor vehicle  
            of a required safety-related vehicle recall.  SB 114 was held  
            on the suspense file in the Assembly Appropriations Committee.

           14)Double referral  . This bill was double- referred to the  
            Assembly Transportation Committee where it was heard on April  
            13, 2015, and passed out on a 16-0 vote. 



          California New Car Dealers Association


                                                                     AB 287

                                                                    Page  25

          Independent Automobile Dealers Association of California


          Advocates for Highway and Auto Safety

          Association of Global Automakers

          California Conference of Machinists

          California Rural Legal Assistance Foundation


          Center for Auto Safety

          Consumer Action

          Consumer Attorneys of California

          Consumer Federation of California

          Consumer Watchdog


                                                                     AB 287

                                                                    Page  26

          Consumers for Auto Reliability and Safety

          Consumers Union

          Courage Campaign

          Housing and Economic Rights Advocates (HERA)

          International Association of Machinists and Aerospace Workers,  
          District Lodge 190

          National Association of Consumer Advocates

          The Sturdevant Law Firm

          The Trauma Foundation

          Analysis Prepared by:Hank Dempsey / P. & C.P. / (916) 319-2200


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