BILL ANALYSIS Ó AB 287 Page 1 Date of Hearing: May 20, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 287 (Gordon) - As Amended May 4, 2015 ----------------------------------------------------------------- |Policy |Transportation |Vote:|16 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Privacy and Consumer | |11 - 0 | | |Protection | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill enacts the Consumer Automotive Recall Safety Act (Act), effective July 1, 2016, which establishes specified AB 287 Page 2 prohibitions and conditions, on the sale or lease of used vehicles and on vehicle rentals, with regard to vehicles subject to manufacturer recall. This bill also: 1)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 or 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. 2)Requires, if a vehicle subject to a recall is not the same line-make as the dealer's franchise, the dealer may sell the vehicle if the dealer discloses the recall to the buyer prior to the sale and the buyer signs a disclosure acknowledging that the vehicle is subject to the recall. 3)Prohibits the renting of a vehicle subject to a safety-related recall until the vehicle is repaired. If the remedy for the recall is not immediately available, but the recall notice provides for a temporary repair to eliminate the safety-related issue, the vehicle can be rented once this repair is accomplished. 4)Requires a private party selling a motor vehicle to disclose in writing to the buyer all Stop Sale-Stop Drive recall and manufacturer recalls, prohibits a buyer from accepting the vehicle transfer document without this disclosure, and authorizes the DMV to refuse transfer of title if the buyer does not also submit his or her written acknowledgement of receiving the seller's disclosure. 5)Requires a vehicle manufacturer to clearly and conspicuously display all recall notifications on its website, to provide, upon request from a consumer seeking to repair a recalled vehicle, a rental or loaner vehicle at no cost until the parts and/or procedures become available, and to adequately and fairly compensate a dealer for costs associated with providing AB 287 Page 3 a rental or loaner vehicle and storing a recalled vehicle waiting to be repaired. 6)Directs the DMV's New Motor Vehicle Board (Board) to hear and decide on disputes between vehicle dealers and manufacturers related to the Act's payment requirements and obligations. 7)Stipulates that nothing in the Act shall effect any legal rights, claims, or remedies otherwise available under law. FISCAL EFFECT: The DMV will incur additional costs associated with verifying the inclusion of the recall disclosure and suspending registration transfer on those transactions that do not contain the disclosure pending resolution of such cases. Given the number of transactions involved, costs could be up to several hundred thousand dollars annually. [Motor Vehicle Account] COMMENTS: 1)Purpose. This bill is intended to provide a comprehensive solution to the dangers of recalled automobiles by requiring used car dealers 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. 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 AB 287 Page 4 Dealers Association. 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. 2)Opposition. Consumers for Auto Reliability and Safety (CARS) in part 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." The Association of Global Automakers argues that recalls are an issue that should be addressed at the federal level, and notes that the National Highway Traffic Safety Administration is current reviewing federal regulations in this regard. 3)Prior Legislation. In 2014, SB 686 (Jackson), which would have prohibited a vehicle dealer from selling a used vehicle if the AB 287 Page 5 dealer knew or should have known that the vehicle is subject to a manufacturer's safety recall and failed to correct the defect, failed passage in the Assembly Business, Professions, and Consumer Protection Committee. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081