BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 287


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          Date of Hearing:  May 20, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          287 (Gordon) - As Amended May 4, 2015


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          |Policy       |Transportation                 |Vote:|16 - 0       |
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          |             |Privacy and Consumer           |     |11 - 0       |
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          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  








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          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  








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            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  








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            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  








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            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